THE INSOLVENCY AND BANKRUPTCY CODE (AMENDMENT) ACT, 2026 - PART – VII - CREDITOR-INITIATED INSOLVENCY RESOLUTION PROCESS

The Act introduces a new type of insolvency resolution process called as ‘Creditor-initiated Insolvency Resolution Process’ (‘CIIRP) by inserting a new Chapter V-A containing sections from 58A to 58K.  The Board, for this purpose, proposed to frame a regulation called as ‘Insolvency and Bankruptcy Board of India (Creditor-initiated Insolvency Resolution Process) Regulations, 2026.  The Board floated a discussion paper for the comments of the stakeholders for the said regulations. 

Eligibility

A CIIRP may be initiated against the following corporate debtors-

• a corporate debtor with assets or income or both, below such levels;
• a corporate debtor with such class of creditors or such amount of debt; or
• such other category of corporate debtors,

as notified by the Central Government.

A CIIRP cannot be initiated in respect of the following corporate debtors-

• an insolvency resolution process or liquidation has been commenced and still pending;
• has undergone CIIRP or pre-packaged insolvency resolution process or completed CIRP during the previous 3 years preceding the CIIRP.

Initiation of CIIRP

An eligible financial institution may initiate CIIRP against the corporate debtor for its default in repayment of loan by appointing a Resolution Professional.  Before initiating a CIIRP the approval of the 51% of the financial creditors of the corporate debtor by conducting a meeting after sending intimation about this in Form No.C1..  The Financial Creditor is to give intimation to the corporate debtor about their intention to initiate CIIRP against the corporate debtor in Form -C2 and give 30 days’ time to make any representation.

On the receipt of representation from the corporate debtor, if the financial creditor still wants to initiate CIIRP, the approval of not less than 51% of the creditors within 30 days from the date of receipt of the representation from the corporate debtor.  If no approval is obtained within the 30 days, the financial creditor may obtain fresh approval and comply with the above said procedure.  If no representation is received within 30 days stipulated, the financial creditor may proceed to appoint resolution professional.  The resolution approving the CIIRP shall be recorded in writing. 

The Financial creditor shall appoint a resolution professional who shall give his consent in Form C3. 

Public announcement

The Resolution Professional shall make a public announcement of the initiation of CIIRP in Form No. C4 and communicate the same to the Adjudicating Authority along with a report in Form No. C5 within 3 days from the date of public announcement.  The report shall confirm-

• verification of the existence and amount of default;
• proof of financial debt and status of the applicant as a financial creditor; and
• such other relevant information as may be notified by the Board through circular.

The initiation of CIIRP shall be deemed to have commenced from the date of public announcement.  The CIIRP period is the period beginning from the commencement to the date of order passed by the Adjudicating Authority. 

Removal of RP

Where, at any time during the creditor-initiated insolvency resolution process, the committee of creditors by a vote of 66% of voting shares is of the opinion that a resolution professional appointed is required to be replaced, it may replace the resolution professional with another insolvency professional after obtaining consent in such form as notified by the Board through circular.  Where the CoC has not been constituted, the eligible financial creditors may, by a vote of not less than 51% in value of the debt due to such eligible financial creditors, decide to replace the RP.  Upon replacement the RP has to intimate the Adjudicating Authority about the removal and replacement of RP.

Objections by corporate debtor

The corporate debtor may raise objections against the CIIRP by filing a petition before the Adjudicating Authority in Form No.C7 within a period of 30 days from the commencement date along with the required fee.  The application shall be signed by the authorised representative of the corporate debtor and supported by an affidavit verifying the contents. 

The Adjudicating Authority, if it is found that no default has occurred or the initiation of CIIRP was in contravention of the provisions of the Act and the Regulations may declare that the commencement of CIIRP is null and void ab initio. The Adjudicating Authority may direct to convert the CIIRP into CIRP. 

The order shall be passed within 30 days from the date of receipt of the objections of the corporate debtor.  If the same is not passed within 30 days, then the Adjudicating Authority is to record reasons for the same in writing.

CIIRP period

The CIIRP shall be completed within 150 days from the date of commencement of CIIRP.  If it is not able to complete the CIIRP within the said time, an application may be filed for the extension of the CIIRP and the Adjudicating Authority may grant 45 days.  No further extension shall be granted by the Adjudicating Authority.  If no resolution plan is approved within the period of CIIRP or within the extended period, the Adjudicating Authority shall pass order converting the CIIRP into CIRP.

Duties and powers of RP

The following are the duties and powers of the RP in CIIRP-

• call for the submission of claim;
• prepare the information memorandum;
• prepare a report confirming as to whether the CIIRP is conducted in accordance with the procedures contained in the Code and the Regulations and the resolution plan confirms with the provisions of Section 29A of the Code;
• to perform the duties of RP in CIRP are also to be done by RP;
• visit the premises of the corporate debtor;
• inspect the assets of the corporate debtor;
• call for information related to compliances applicable to the corporate debtor and its status;
• to file report as per the requirements; and
• any other duty as may be specified. 

The staff and officers of the corporate debtor shall extend their co-operation to the RP in his functioning.

Committee of Creditors

The RP shall constitute the CoC and report to the Adjudicating Authority within 2 days of the verification of the claims.  The RP shall convene the first CoC meeting within 3 days of filing the report. 

Moratorium

After obtaining the approval of CoC, the RP shall file an application before the Adjudicating Authority for the declaration of moratorium in Form No. C8.  The RP can file such application even before the constitution of CoC provided 51% of the financial creditor approves for the same.  The moratorium (Section 14 of the Code) shall commence from the date of the application and continue be in operation from the application.  The Adjudicating Authority, if it considers that the moratorium is required for the successful conduct of CIIRP may allow the application or reject the application.  The resolution professional shall make a public announcement of the directions of the Adjudicating Authority declaring the moratorium or rejecting the application in Form No. C9.

Information Memorandum

The promoters and the officials of the corporate debtor are to give all information as sought by the RP after the commencement of CIIRP.   The RP shall prepare the information memorandum and forward the same to all the members within 45 days of the commencement of CIIRP. 

Management

In CIRP, the management of the affairs will vest on IRP/RP.  But in this process, the management of the corporate affairs shall vest on the Board of Directors.  The RP shall attend the meetings of the members, board and committee meetings.  The RP is having power to reject any of the resolutions passed in the said meetings.  If the resolution is rejected by the RP the same shall not be approved. 

The corporate debtor shall not take any of the following actions without the prior approval of the CoC-

• transaction above a threshold as decided by the committee; and
• any other matter as decided by the committee and not covered under section 28 of the Code.

The corporate debtor shall provide the following details having material impact on the business of the corporate debtor to the resolution professional-

• details of legal proceedings;
• details of key contracts executed; and
• any other information required by the resolution professional or the committee.

Resolution Plan

The resolution professional shall publish brief particulars of the invitation for expression of interest in Form No. C10, not later than 50^th day from the insolvency commencement date, from interested and eligible prospective resolution applicants to submit resolution plans. The request for resolution plans shall allow prospective resolution applicants a minimum of fifteen days to submit the resolution plan(s). The committee shall use a challenge mechanism, at any stage during the consideration of resolution plan(s).

Where the committee of creditors, by a vote of not less than sixty-six per cent. of the voting share, approves the resolution plan in accordance with the provisions of section 30, the resolution professional shall submit such approved resolution plan to the Adjudicating Authority, along with a report. On receipt of the resolution plan, the Adjudicating Authority, shall, pass an order in accordance with the provisions of Section 31 of the Code. 

CIIRP costs

The following will include in CIIRP costs-

(a) fee payable to resolution professional and authorised representative of creditors in the class;

(b) any expenses incurred by the resolution professional for discharge of his functions as approved the committee;

(c) fee payable to the Board under regulation 31A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016; and

 (d) any other cost directly relating to the process and approved by the committee.

Withdrawal

An application for withdrawal of the creditor-initiated insolvency resolution process under section 58I shall be made in Form No. C11 and shall be accompanied by a bank guarantee towards the expenses incurred for conducting the creditor-initiated insolvency resolution process till the date of filing of the withdrawal application.  The 90% of the CoC is to approve for the withdrawal of the public announcement.  The Adjudicating Authority shall pass an order within 15 days from the receipt of the application.  If it cannot be able to decide within that date, the Adjudicating Authority shall record the reasons for the same in writing.

Conversion of CIIRP to CIRP

If the Adjudicating Authority does not receive a resolution plan within the stipulated period or it is satisfied that the corporate debtor or its personnel have failed to assist or co-operate with the RP or the Adjudicating Authority rejects the resolution plan, then it shall,

• by an order convert the CIIRP to CIRP;
• decide the stage from which the corporate insolvency resolution process shall commence, after considering any recommendation of the committee of creditors, made in such manner as may be specified;
• appoint the resolution professional for the creditor-initiated insolvency resolution process, as the interim resolution professional or the resolution professional for the CIRP, as the case may be;
• declare a moratorium;
• declare that the costs incurred during the creditor-initiated insolvency resolution process, if any, shall be included as part of insolvency resolution process costs for the purposes of the corporate insolvency resolution process of the corporate debtor.

If the CoC approves for the conversion of CIIRP to CIRP by means 66% of vote the RP may make an application before the Adjudicating Authority to get its order. 

If the Adjudicating Authority orders for the conversion of CIIRP to CIRP –

• the proceedings of anti-avoidance transaction taken during the period of CIIRP shall continue in CIRP;
• the CIIRP ends on the commencement of CIRP;
• such an order shall be deemed to be an order of admission of application under Section 7 of the Code.

Model Timelines

1. Representation by CD                        :     30 days
2. 2^nd approval allotted to creditors        :     30 days
3. Appointment of RP                              :         A
4. RP to make public announcement      :        A+3 – T

1. Public announcement/commencement date               :           T=0
2. Submission of claims by creditors                               :           T + 7;
3. Verification of claims received                                     :           T + 14;
4. Constitution of CoC along with filing of report to AA:               T + 16;
5. First CoC Meeting                                                        :           T + 19;
6. Appointment of 2 Registered Valuers                          :           T + 24;
7. Publishing of Form G                                                   :           T + 30;
8. Submissions of IM to CoC                                           :           T + 45;
9. Submission of EoI                                                        :           T + 50;
10. Provisional PRA List                                                    :           T + 55;
11. Submission of objections to provisional list                 :           T + 60;
12. Final List of RA                                                            :           T + 70;
13. Issue of RFRP                                                             :           T + 80;
14. Receipt of resolution plans                                          :           T + 90;
15. Consideration of plan by CoC and submission to AA  :          T + 120;
16. Approval of Resolution Plan by AA                              :           T +150 days.