Who can start insolvency proceedings under the IBC?
The Insolvency and Bankruptcy Code, 2016 allows three routes into the corporate insolvency resolution process. A financial creditor applies under Section 7, an operational creditor under Section 9 after first serving a demand notice under Section 8, and the corporate debtor itself under Section 10. Applications are made to the National Company Law Tribunal, and the resolution process is time bound, with an outer limit of 330 days including any time taken in litigation.
Corporate Legal Partners provides a comprehensive and cohesive Bankruptcy and Insolvency practice that addresses concerns arising from financial difficulty and reorganisation. Our team handles both the litigation and the advisory side of this work, offering support through each stage of a resolution process.
We represent clients including banks and NBFCs, companies, and homebuyers before the NCLT, NCLAT and Supreme Court, in initiating and in defending insolvency and bankruptcy proceedings.
What the practice covers
We offer practical solutions to help clients navigate the changing environment of insolvency law under the Insolvency and Bankruptcy Code, 2016. We have extensive experience across restructuring frameworks, including before the National Company Law Tribunal and other regulatory bodies.
- Applications under Sections 7, 9 and 10
- Defending admission and disputing operational debt
- Representation before the committee of creditors
- Resolution plans and their approval
- Avoidance applications and preferential transactions
- Appeals to the NCLAT and the Supreme Court
Advisory
Beyond contested proceedings, we advise on the position of a stressed account before any filing is made, on the exposure of directors and guarantors, and on the restructuring options available outside the Code.
Common questions
What is the difference between a financial and an operational creditor?
A financial creditor is owed a debt disbursed against the consideration for the time value of money, typically a lender. An operational creditor is owed for goods or services supplied, including employees and statutory dues. They enter the process by different sections and have different roles in the committee of creditors.
How long does the resolution process take?
The Code sets 180 days from admission, extendable once by up to 90 days. The outer limit is 330 days including time spent in legal proceedings, though tribunals have in some circumstances permitted an extension beyond that.
What happens to recovery actions once insolvency is admitted?
A moratorium under Section 14 takes effect on admission. It prohibits the institution or continuation of suits, the enforcement of security interests, and the recovery of property from the corporate debtor, for the duration of the process.
Can homebuyers bring proceedings under the Code?
Yes. Allottees under a real estate project are treated as financial creditors, subject to the threshold requirements introduced for that class of applicant. The firm acts for homebuyers as well as for lenders and corporate debtors.