TaxTMI 
TaxTMI 
CORPORATE INSOLVENCY RESOLUTION PROCESS
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....ORPORATE INSOLVENCY RESOLUTION PROCESS<br>By: - DR.MARIAPPAN GOVINDARAJAN<br>Corporate Laws / IBC / SEBI<br>Dated:- 7-6-2025<br>Introduction The Insolvency and Bankruptcy Code, 2016 ('Code' for short) provides for the insolvency resolution process for corporate persons, personal guarantors, liquidation, pre-packaged insolvency resolution process, bankruptcy process etc. Chapter II of Part II of the Code provides the insolvency resolution process for corporate persons. To implement the provisions of the Chapter II of Part II of the Code the Insolvency and Bankruptcy Board of India ('Board' for short) made a regulation called 'Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulatio....
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....ns, 2016 ('Regulations' for short). Stages in CIRP The Corporate Insolvency Resolution Process ('CIRP' for short) involves the following stages- * Admission of application by the Adjudicating Authority; * Appointment of Interim Resolution Professional ('IRP' for short); * Public Announcement; * Constitution of Committee of Creditors ('CoC' for short); * Appointment of Resolution Professional ('RP' for short); * Information Memorandum; * Expression of interest to invite to prospective Resolution Applicants ('RA' for short); * Request for Resolution plans; * Approval of Resolution plan by CoC and Adjudicating Authority. Admission of application The Code provides for initiating CIRP against corporate debtor by financial c....
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....reditor or operational creditor or by the corporate applicant itself. Any of them who wants to initiate CIRP against a corporate debtor to file a petition before the Adjudicating Authority, after complying with the provisions of the Code in this regard, along with the documents and payment of fees. The Adjudicating Authority, if it is satisfied that the application complies with the required provisions of the Code, shall admit the application for CIRP. The date of order is the commencement of CIRP. Appointment of IRP After admission of the application for CIRP the Adjudicating Authority shall declare a moratorium with immediate effect. The Adjudicating Authority shall also appoint an IRP to carry out the CIRP up to....
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.... the constitution of CoC and appointment of RP. The Adjudicating Authority shall direct the IRP to cause public announcement of the initiation of CIRP within 3 days from the date of appointment of IRP, and call for claims from the creditors of the Corporate Debtor. Public announcement The IRP shall as per the directions of Adjudicating Authority make public announcement within 3 days from his appointment in Form A containing the required details. The public announcement shall be published- * in one English and one regional language newspaper with wide circulation at the location of the registered office and principal office, if any, of the corporate debtor and any other location where in the opinion of the interim reso....
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....lution professional, the corporate debtor conducts material business operations; * on the website, if any, of the corporate debtor; and * on the website, if any, designated by the Board for the purpose. The last date for submission of claims from the creditor shall be indicated in the public announcement. The last date for submission of the claims shall be 14 days from the date of appointment of IRP. Constitution of CoC On receipt of the claims from the creditors the IRP is to verify the claims and finalise the list of creditors. The Committee of Creditors is to be formed by the Financial Creditors only. The IRP shall constitute the CoC and decide the voting powers of the CoC members. The IRP shall report the ....
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....constitution of CoC to the Adjudicating Authority. Appointment of RP After constituting the CoC the IRP shall be replaced by another insolvency professional, who may be called as Resolution Professional. The IRP may continue as RP at the approval of CoC or he may be replaced by CoC after getting the approval of the Adjudicating Authority. RP is to conduct the entire CIRP. He shall work as per the advice of CoC. He shall conduct various meetings as and when required. He is to preside every meeting and conduct the meeting and prepare the minutes of the meeting and to take further course of action in CIRP. It shall be the duty of the RP to preserve and protect the assets of the corporate debtor, including....
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.... the continued business operations of the corporate debtor. Where, at any time during the CIRP, the CoC is of the opinion that a RP appointed is required to be replaced, it may replace him with another insolvency professional as RP on the approval of the Adjudicating Authority. Information Memorandum The RP shall submit the information memorandum in electronic form to each member of the committee on or before the 95th day from the insolvency commencement date. The information memorandum shall highlight the key selling propositions and contain all relevant information which serves as a comprehensive document conveying significant information about the corporate debtor including its operations, financial statements, ....
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....to the prospective resolution applicant and shall contain the all details of the corporate debtor. The RP shall provide to the resolution applicant access to all relevant information in physical and electronic form on undertaking. Expression of interest The RP may, with the approval of the CoC, invite expression of interest for submission of resolution plans for the corporate debtor as a whole, or for sale of one or more of assets of the corporate debtor, or for both. The resolution professional shall publish brief particulars of the invitation for expression of interest in Form G at the earliest, not later than 60th day from the insolvency commencement date, from interested and eligible prospecti....
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....ve resolution applicants to submit resolution plans. A prospective resolution applicant, who meet the requirements of the invitation for expression of interest, may submit expression of interest within the time specified in the invitation. An expression of interest shall be unconditional and be accompanied by required documents and undertakings. The RP shall examine all the applications and shall issue a provisional list of eligible prospective resolution applicants within ten days of the last date for submission of expression of interest to the committee and to all prospective resolution applicants who submitted the expression of interest. If any objection is received on the list the same may be considered and a final ....
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....list of eligible prospective resolution applicants shall be prepared by RP. Request for resolution plan The RP shall, within 5 days of the date of issue of the final list issue the information memorandum, evaluation matrix and a request for resolution plans to every resolution applicant in the final list. The request for resolution plans shall detail each step in the process, and the manner and purposes of interaction between the RP and the prospective resolution applicant, along with corresponding timelines. The resolution plans shall be submitted within 30 days. Approval of Resolution plan A prospective resolution applicant in the final list may submit resolution plan or plans prepared in accordance wit....
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....h the Code and these regulations to the RP electronically within the time given in the request for resolution plans with the required affidavit and undertaking. The RP shall submit to the committee all resolution plans along with all the required details. The CoC shall evaluate the resolution plans which comply with the requirements of the Code and regulations made thereunder, as per evaluation matrix; record its deliberations on the feasibility and viability of each resolution plan; and vote on all such resolution plans simultaneously. The CoC shall approve the resolution plan by 66% of voting by the CoC members. The RP shall endeavour to submit the resolution plan approved by the committee to the Adjudicating Authority at least 15....
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.... days before the maximum period for completion of CIRP, along with a compliance certificate in Form H and the evidence of receipt of performance security required. The RP shall, within 15 days of the order of the Adjudicating Authority approving a resolution plan, intimate each claimant, the principle or formulae, as the case may be, for payment of debts under such resolution plan. The resolution plan is binding on the corporate debtor, creditors and government agencies. CIRP - Birla Tyres Limited As an example, the CIRP case of Birla Tyres Limited is discussed which involves the above steps. About the company Birla Tyres Limited was first established in 1991, as part of Kesoram Industries Limited, initially co....
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....llaborating, in the production and development of its tyres with world-class tyre manufacturer Pirelli. It is engaged in manufacturing of tyres for commercial vehicles, farm vehicles and heavy earthmoving machinery as well as motorcycles and three wheelers. The Company is a public company limited by shares, and incorporated on 22.11.2018, under the provisions of Companies Act, 2013. Admission of application SRF Limited, an operational creditor, filed the application before the National Company Law Tribunal (NCLT), Kolkata Bench under Section 9 of the Code, alleging a default in the payment of approximately Rs. 15.84 crore for the supply of tyre cord fabric, vide No. CP/250/2021. Upon admission of the application on....
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.... 05.05.2022, the NCLT Kolkata Bench issued an order initiating CIRP against Birla Tyres Limited. The tribunal's order triggered a moratorium under Section 14 of the Code, prohibiting the institution or continuation of suits, recovery actions, and enforcement of security interests against the corporate debtor. Appointment of IRP Mr. Seikh Abdul Salam, having IP registration number 12966, was appointed as an Interim Resolution Professional, vide NCLT order dated 5th May 2022, under section 16 of the Code. Public announcement The IRP made a public announcement on 07.05.2022 inviting claims from creditors. The announcement provided the last date for submission of claims which was 19.05.2022 and the contact details of the IRP. Constitution ....
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....CoC In response to the public announcement financial and operational creditors submitted claims which were verified by the IRP. Claims amounting to approximately Rs. 1,800 crores were admitted, including those from major financial creditors such as State Bank of India, ICICI Bank, and Yes Bank. The IRP constituted the CoC on 28th May 2022 based on the claims admitted from financial creditors. Appointment of RP The CoC held its first meeting on 03.06.2022, and Seikh Abdul Salam was confirmed as the Resolution Professional by the Adjudicating Authority vide order dated 29.06.2022. Information Memorandum The RP prepared and published the Information Memorandum ('IM' for short) on 15.10.2022. The IM included critical information such....
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.... as the financial position of the company, assets and liabilities, litigation status, and operational performance. The IM served as a basis for prospective applicants to assess the viability and prospects of Birla Tyres as a going concern. Expression of interest The RP invited Expressions of Interest ('EoI' for short) from prospective resolution applicants to submit a resolution plan. The first invitation was issued on 01.08. 2022 and due to insufficient response and to seek more competition, an extension was sought on 13.08.2022, extending the deadline to 30.09.2022, against which 21 persons expressed their interest, and the first provisional list of eligible Prospective Resolution Applicant....
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....s (PRA) was issued on 10.10.2022. The final list of PRAs was issued on 25.10.2022 which included Dickey Alternative Investments Trust (acting through its fund manager Dickey Asset Management Pvt Ltd), Falcon Marine Exports Limited, Jindal Poly Films Limited, Jindal Power Limited, KLJ Resources Limited, RKG Fund-I, scheme of RKG Trust, etc. Interested applicants were required to fulfil eligibility criteria under Section 29A of the Code and submit requisite documentation, including net worth certificates and undertakings. Request for Resolution plan The RP issued a formal Request for Resolution Plan (RFRP) along with an evaluation matrix dated 15th October 15.10.2022 which had a deadline....
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.... of up to 14.11.2022. The RFRP detailed the manner in which plans would be submitted, evaluated, and voted upon by the CoC. The evaluation matrix outlined criteria such as upfront payment to creditors, equity infusion, business revival strategy, and timeline for implementation. In the meanwhile, Mr. Pratim Bayal was appointed as a Resolution Professional vide NCLT order dated 31.10.2022 replacing the RP. Approval of Resolution plan Multiple resolution plans were submitted in response to the request for resolution plan. After scrutiny and negotiations, the CoC approved a joint resolution plan submitted by Dalmia Bharat Refractories Limited with Himadri Specialty Chemicals Limited as a Strategic Partner. The resolution p....
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....lan was approved by the CoC vide meeting dated 31.07.2023with a voting share of 82.48%. The approved plan proposed a revival strategy including debt repayment of approximately Rs. 300 crore and business restructuring measures. The approved resolution plan was submitted to NCLT, Kolkata Bench, for final approval under Section 31 of Code. After reviewing the plan and ensuring compliance with statutory provisions, the tribunal approved the resolution plan on 19.10.2023. As part of the implementation of the plan, the shares of Birla Tyres Limited were delisted from the stock exchanges, and new management took over the affairs of the company. <br> Scholarly articles for knowledge sharing by authors, experts, professionals ....