CIRP

What CIRP means, in plain terms

Before the IBC, a failing company drifted between forums for years while its value drained away. CIRP replaces that drift with a single, clock-bound negotiation. The idea is simple: the people with the most to lose — the financial creditors — get a fixed window to find someone willing to rescue the business (a resolution applicant with a resolution plan: new money, restructured debt, a change of management), and if they cannot, the company is liquidated quickly rather than left to rot. The Code states this object in its preamble: resolution "in a time bound manner for maximisation of value of assets" and balancing the interests of all stakeholders. Three design choices follow from it: the trigger is a proved default, not a balance-sheet test; control shifts from debtor to creditors on admission ("creditor in control"); and every stage has a deadline.

Two phrases in the definition matter. First, corporate debtor — CIRP under Part II is for corporate persons (companies and LLPs), not individuals. Second, default (Section 3(12)) means a debt that has become due and payable and has not been paid — and for CIRP, Section 4 requires that default to be at least ₹1 crore. That figure is not original: the Code as enacted said ₹1 lakh, and the Central Government raised it to the statutory ceiling of ₹1 crore by Notification S.O. 1205(E) dated 24 March 2020; the text of Section 4 has read "one crore rupees" since that date.

Who can put a company into CIRP

Section 6 opens the process to three applicants, each through a different door, because each kind of debt is proved differently. A financial debt (Section 5(8)) is money disbursed against the consideration for the time value of money — loans, bonds, debentures, finance leases, amounts with the commercial effect of borrowing. An operational debt (Section 5(21)) is a claim for goods or services (including employment dues) or dues payable to a government under law.

Whichever door is used, the NCLT must admit or reject within 14 days of receiving the application — for a financial creditor's application, after ascertaining the default from the information utility record or other evidence (Sections 7(4)–(5), 9(5), 10(4)). Since the 2026 amendment, if the Tribunal does not decide within those 14 days it must record its reasons in writing, and where a Section 7 application is complete and the default is shown, no other ground can be used to reject it. The date of admission is the insolvency commencement date (Section 5(12)) — the date from which the CIRP clock, the moratorium and the claims cut-off all run.

What happens the day CIRP is admitted

Admission is not a gradual slide; Section 13 bundles three consequences into the admission order itself. The Tribunal declares a moratorium, causes a public announcement inviting claims, and appoints an Interim Resolution Professional (IRP).

The moratorium (Section 14) is a statutory freeze. While it lasts, no suit or proceeding (including execution of a decree) can be started or continued against the company; the company cannot transfer, encumber or dispose of its assets; no one can enforce a security interest against its property — including under SARFAESI; and landlords and owners cannot recover property the company occupies. Essential supplies cannot be cut off, and neither can supplies the IRP/RP identifies as critical to keeping the company running as a going concern (unless dues for the moratorium period go unpaid). Two things sit outside the freeze: transactions the Government notifies in consultation with a financial-sector regulator, and claims against a surety — the moratorium protects the company, not its guarantors. The freeze runs until the CIRP ends — by plan approval or by a liquidation order.

Management changes hands (Sections 16–17). The IRP is appointed on the admission date itself — under Section 7, normally the professional the applicant proposed. From appointment, the management of the company's affairs vests in the IRP, the powers of the board of directors stand suspended and are exercised by the IRP, the company's officers must report to him and open the records, and the company's banks act on his instructions. His first duties (Section 18) are fact-gathering and crowd control: collect the company's financial and operational information, take custody of its assets, receive and collate — and, as the 2026 amendment makes express, verify — the claims that come in against the public announcement (which must be made within 3 days of his appointment, Regulation 6(1) of the CIRP Regulations, with claims due within 14 days of appointment), and then constitute the Committee of Creditors. Throughout, he must run the company as a going concern (Section 20) — CIRP is not a shutdown; the business keeps operating under new hands.

The Committee of Creditors runs the show

The Committee of Creditors (CoC) is CIRP's decision-maker, and it is deliberately lender-only. Under Section 21 it comprises all financial creditors, each voting in proportion to the debt owed to it. A financial creditor who is a related party of the company has no right to sit, participate or vote (with a narrow carve-out for regulated financial creditors who became related parties only by converting debt into equity before CIRP began). Where a debt is held by a large class — debenture holders, homebuyers — an authorised representative votes for the class. Operational creditors are stakeholders, not decision-makers: if their aggregate dues are at least 10% of the debt, they receive notice of CoC meetings and may attend, but they have no vote (Section 24). If a company has no financial creditors at all, the committee is constituted of such persons as are specified (proviso to Section 21(8)).

Voting thresholds split by importance. Ordinary CoC decisions need 51% of the voting share (Section 21(8)). The structural decisions need 66%: extending the CIRP period under Section 12; appointing or replacing the Resolution Professional; approving the RP's sensitive actions under Section 28 (raising interim finance beyond agreed limits, creating security, related-party transactions, changing management or auditors, and the like — an action taken without the required approval is void); approving the resolution plan; and resolving to liquidate the company. The CoC's first meeting must be held within 7 days of its constitution (Section 22(1)); at that meeting it decides, by 66%, whether the IRP continues as Resolution Professional (RP) or is replaced. From then on the RP conducts the whole process (Sections 23, 25): custody of assets, an updated claims list, the information memorandum (Section 29) on which plans are written, invitations to prospective applicants, presenting every compliant plan to the CoC, and pursuing avoidance and fraudulent-trading applications. In the Regulations' model timeline (Regulation 40A), this front half of the process is mapped day by day — public announcement by T+3, claims by T+14, the CoC certified by T+23, its first meeting by T+30, expressions of interest invited by T+60, the request for resolution plans issued by T+105, plans received by T+135 and the approved plan filed with the NCLT by T+165.

The timeline: 180, plus 90, capped at 330 — three different numbers

The most-misstated thing about CIRP is its duration, because Section 12 contains three figures that do three different jobs:

So "180 to 330 days" is not a range a case can land anywhere in: a straightforward CIRP has 180 days, a complex one can earn 90 more by vote and Tribunal order, and 330 days from admission is the mandatory end of the road however the time was consumed.

The resolution plan — and who may not file one

The RP invites plans against criteria the CoC approves, but the gate is statutory before it is commercial. Section 29A disqualifies, among others, undischarged insolvents, wilful defaulters, persons disqualified as directors, persons barred by SEBI from the securities markets, promoters or controllers of the company whose account (or an account of a company they promote or control) has been an NPA for a year or more — unless every overdue rupee with interest and charges is paid before the plan is submitted — persons whose companies saw avoidance-transaction orders while they were in charge, and anyone who gave a guarantee for the debtor that has been invoked and remains unpaid. The disqualification also reaches persons acting jointly or in concert and their connected persons. For a debtor that is an MSME, the NPA limb and the guarantee limb do not apply (Section 240A) — Parliament's recognition that an MSME's own promoter is usually its only realistic rescuer.

A compliant plan (Section 30(2)) must pay the CIRP costs in priority, and must assure operational creditors no less than the higher of what Section 53 would give them in liquidation or what a Section 53-ordered distribution of the plan value would give them; since the 2026 amendment, financial creditors who vote against the plan are protected at the lower of those two measures. The CoC approves by 66%, considering feasibility and viability, and — another 2026 addition — must record its reasons for approving. The RP then files the approved plan with the NCLT (Section 30(6)), which must pass its approval or rejection order within 30 days, recording reasons if it takes longer (Section 31(2A)).

Approval changes everything (Section 31). The plan becomes binding on the company, its employees, members, creditors — expressly including governments and local authorities owed statutory dues — guarantors and all stakeholders. The moratorium lifts. And since the 2026 amendment the clean slate is in the section itself: unless the plan says otherwise, any claim against the company or its assets from before approval, under any other law, stands extinguished, and no proceedings on it — not even assessment proceedings — can be started or continued against the company (Section 31(6)); claims against promoters, erstwhile management and guarantors are untouched. Section 238 gives the Code overriding effect over inconsistent laws, which is what makes this binding force work against other statutes.

Exits before the end: withdrawal and restoration

An admitted case can be withdrawn, but only just, and less easily than before. Under Section 12A as substituted in 2026, withdrawal happens on the Resolution Professional's application with 90% of the CoC's voting share in favour, and it is barred altogether at both ends of the process — before the CoC is constituted, and after the first invitation for submission of a resolution plan has been issued. The Tribunal must decide the withdrawal application within 30 days. The 2026 amendment also added a second-chance door at the far end: if CIRP fails and liquidation looms, the CoC may apply by 66% before the liquidation order is passed to have the CIRP restored — back to the plan-invitation stage where a plan was rejected — for up to 120 days; restoration can be granted only once (Section 33(1A)–(1B)).

If CIRP fails: liquidation is a different process

CIRP and liquidation are sequential alternatives, not synonyms. Liquidation follows (Section 33) where no resolution plan reaches the Tribunal within the permitted period; where the Tribunal rejects the plan for non-compliance with Section 30(2); where the CoC itself resolves by 66%, at any time after its constitution and before a plan is confirmed, that the company be liquidated (or, on specified conditions, dissolved); or where the company contravenes an approved plan and an affected person applies. A liquidator then sells the assets and distributes the proceeds strictly by the Section 53 waterfall: first, CIRP and liquidation costs in full; then, equally, 24 months' workmen's dues and secured creditors who surrendered their security; then 12 months' dues of other employees; then unsecured financial debts; then, equally, two years' government dues and a secured creditor's shortfall after enforcing its security; then all remaining debts; and only at the very end, preference and equity shareholders. Resolution exists precisely to beat this outcome — a going-concern sale or revival almost always realises more than an asset-by-asset break-up — which is why the statute spends 330 days trying to avoid it.

This page explains the corporate insolvency resolution process under Part II of the Insolvency and Bankruptcy Code, 2016 for study and compliance reference, in the form in force after the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (in force from 26 May 2026). Timelines are statutory; actual cases regularly run into the 330-day ceiling because of litigation. It is not legal advice for a specific insolvency.