Key Processes involved in the Corporate Insolvency Resolution Process in the period between the insolvency commencement date and approval of resolution plan by Adjudicating Authority under IBC, 2016:
Some of the important dates that are to be kept in view before analysing the CIRP are as follows:
- Section 5(11): Initiation Date “initiation date” means the date on which a financial creditor, corporate applicant or operational creditor, as the case may be, makes an application to the Adjudicating Authority for initiating corporate insolvency resolution process or pre-packaged insolvency resolution process, as the case may be;
- Section 5(12): Insolvency Commencement Date “insolvency commencement date” means the date of admission of an application for initiating corporate insolvency resolution process by the Adjudicating Authority under sections 7, 9 or section 10, as the case may be:
- Section 5(14): Insolvency Resolution Process Period “insolvency resolution process period” means the period of one hundred and eighty days beginning from the insolvency commencement date and ending on one hundred and eightieth day;
- Section 5(17): Liquidation Commencement Date: “liquidation commencement date” means the date on which proceedings for liquidation commence in accordance with section 33 or section 59, as the case may be;
The Process of CIRP is outlined as under:
- Initiation of CIRP: The first step in the process of CIRP is the initiation of CIRP proceedings. This can be achieved through triggering an application of the CIRP. This can be done by the corporate debtors where the minimum amount of default is 1 lakh rupees by filing a CIRP application at NCLT (National Company Law Tribunal). However, the Central Government has the discretion to increase this threshold amount up to 1 crore rupees for both CIRP and Pre-packaged insolvency resolution process. These provisions are covered in the Section 4 of the IBC. Section 6 of the IBC outlines the persons who can initiate the IBC proceedings. They are:
- Financial Creditors: As per Section 7, they can initiate the proceedings by themselves or jointly with other financial creditors if the default has been committed by a corporate debtor.
- Operational Creditors: Under Section 8 and 9 of the code, the operational creditors may send a demand notice to the corporate debtor demanding the payment of the amount involved in the default to the corporate debtor. The corporate debtor within 10 days of the receipt of the notice, either pays the debt or brings to the notice of operational creditor the existence of a dispute. and record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute. After expiry of the period of 10 days after delivery of the notice of demand of the dues, if the operational creditor does not receive the payment, the operational creditor may file an application under adjudicating authority for initiating CIRP process.
- Corporate Debtor: Under Section 10 of the code, if a corporate debtor has committed a default, a corporate applicant can file a CIRP application before the Adjudicating Authority. It is to be noted that initiation of CIRP under Sections 7, 9 or 10 to be stalled if a pre-packaged insolvency application is pending or has been filed within 14 days of CIRP application. In such cases, pre-packaged insolvency to be prioritized.
- Appointment of Interim Resolution Professional: Under Section 16 of the code, the Adjudicating Authority appoints the Interim Resolution Professional within 14 days of the insolvency commencement date.
- Declaration of Moratorium: The adjudicating authority, on the insolvency commencement date, declares the moratorium for prohibiting all of the following:
- The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of the judgement, decree or order in any court of law, arbitration panel, tribunal or any other authority
- Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or any interest therein.
- Any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action arising out of SARFAESI Act, 2002
- The recovery of any property by any owner or lessor where such property is occupied or in possession of corporate debtor.
- Announcement of Insolvency Resolution Process: The public announcement shall be made by the Adjudication Authority with the following information:
- Name and address of corporate debtor under insolvency resolution process
- Name of the authority with which the corporate debtor is registered.
- Last date of submission of claims
- Details of IRP (Insolvency Resolution Professional) who shall be vested with the management of corporate debtor and be responsible for receiving claims.
- Penalties for misleading or false claims
- The date on which the CIRP process shall close, which shall be one hundred eightieth day from the date of commencement of CIRP.
- Constitution of Committee of Creditors: An IRP shall constitute a committee of creditors as per Section 21 of the Code. The first meeting of the committee of creditors shall take place within 7 days of the formation of the committee of creditors. The report certifying the formation of CoC as per Regulation 17(1) is to be filed.
- Appointment of Insolvency Resolution Professional: Till the time the Resolution Professional is appointed, which is T+30 from the date of commencement of CIRP, the management of the corporate affairs of the corporate debtor shall vest in the Interim Resolution Professional. IRP shall perform the duties as outlined in the Sections 17 to 23 of the Code. The CoC shall appoint the Insolvency Resolution Professional as per Section 24 of the Code.
- Preparation of Information Memorandum by Resolution Professional: As per section 29 and regulation 36, the Resolution Professional shall prepare an Information Memorandum.
- Presentation of Resolution Plan by Resolution Applicant: A Resolution Applicant is a person who presents the Resolution Plan to the Resolution Professional, by fulfilling the conditions of Section 29A of the IBC. Resolution Applicant submits an Affidavit that he is not disqualified under Section 29A of the IBC.
- Approval or Rejection of the Resolution Plan: The Resolution plan is to be approved by a minimum of 66% votes by the members of Committee of Creditors. Upon approval of the plan by CoC, the RP shall file an application before the Adjudicating Authority for approval of the plan. Following this, Adjudicating Authority may, upon its discretion, accept or reject the same. The resolution plan is implemented and becomes legally operative on the corporate debtor and all parties if the NCLT authorizes it. The Tribunal may order the corporate debtor’s liquidation if the NCLT does not approve the resolution plan, or it doesn’t receive resolution plan before the expiry of CIRP period.
Key timelines in the entire CIRP Process:
| Section / Regulation | Description of Activity | Norm | Latest Timeline |
| Section 16(1) | Commencement of CIRP and appointment of IRP | …. | T |
| Regulation 16(1) | Public Announcement Inviting Claims | T+3 | |
| Section 15 (1) (c) / Regulation 6 (2) (c) and 12 (1) | Submission of Claims | For 14 days from appointment of IRP | T+14 |
| Regulation 12 (2) | Submission of Claims | Upto 90th day from date of commencement | T+90 |
| Regulation 13 | Verification of Claims received under regulation 12(1) | Within 7 days from the receipt of the claim. | T+21 |
| Regulation 13 (1) | Verification of Claims received under regulation 12(2) | Within 7 days from the receipt of the claim. | T+97 |
| Section 21(6A) / Regulation 16 A, 17(1) | Application for appointment of AR and Report certifying constitution of CoC | Within 2 days from the verification of claims under Regulation 12 (1) | T+23 |
| Section 22(1) / Regulation 19(2) | 1st Meeting of the CoC | Within 7 days from the filing of the report certifying the constitution of CoC, but with 5 days notice | T+30 |
| Section 22(2) | Resolution to appoint RP by the CoC | In the first meeting of the CoC | T+30 |
| Section 16(5) | Appointment of RP | On Approval by the Adjudicating Authority | — |
| Regulation 17(3) | IRP performs the function of RP till the time RP is appointed | If RP is not appointed by the 40th day of commencement | T+40 |
| Regulation 27 | Appointment of Valuer | Within 7 days of appointment of RP, but not later than 47 day of commencement | T+47 |
| Section 12(A) / Regulation 30 (A) | Submission of application for withdrawal of application admitted | Before Issue of EOI | W |
| CoC to dispose off the application | Within 7 days of receipt of 7 days of formation of CoC, whichever is later | W+7 | |
| Filing application of withdrawal with 90% majority voting by RP to AA | Within 3 days of approval by CoC | W+10 | |
| Regulation 35 | RP to form an opinion on preferential and other transaction | Within 75 days of commencement | T+75 |
| RP to decide on preferential and other transactions | Within 115 days of commencement | T+115 | |
| Regulation 36 (1) | Submission of IM to CoC | Within 95 days of commencement | T+95 |
| Regulation 36A | Publish form G and Invitation of EoI | Within 60 Days of commencement | T+60 |
| Submission of EOI | At least 15 days from the issue of EOI | T+75 | |
| Provisional list of RAs by RP | Within 10 days of receipt of EOI | T+85 | |
| Submission of objections to provisional list | For 5 days from the date of provisional list | T+90 | |
| Final list of RAs by RP | Within 10 days of receipt of objections | T+100 | |
| Regulation 36B | Issue of RFRP, including evaluation matrix and IM | Within 5 days of the issue of provisional list | T+105 |
| Receipt of Resolution plans | At least 30 days from the issue of RFRP | T+135 | |
| Regulation 39(4) | Submission of CoC approved Resolution plan to AA | As soon as approved by CoC | T+165 |
| Section 31 (1) | Approval of Resolution plan by AA | T+180 |
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