The CIRP Timeline Under the IBC: What Creditors Should Expect

This article is general information only, not legal advice, and not solicitation of work. It should not be relied upon as a substitute for advice on your specific facts.

What CIRP Is

The Corporate Insolvency Resolution Process, under the Insolvency and Bankruptcy Code, 2016, is a time-bound mechanism for resolving a corporate debtor’s default, aimed either at reviving the company through a resolution plan or, failing that, liquidating it. It can be triggered by a financial creditor, an operational creditor, or the corporate debtor itself, once a default above the statutory threshold is established.

Admission and the Moratorium

Once the National Company Law Tribunal admits an application, it declares a moratorium, suspending all pending suits, recovery actions, and enforcement of security interests against the corporate debtor, and appoints an interim resolution professional to take over management. This is the point at which individual creditor recovery actions effectively pause in favour of a collective process.

The Committee of Creditors and Resolution Plans

Financial creditors form a Committee of Creditors, which evaluates resolution plans submitted by prospective resolution applicants and approves a plan by a vote of at least sixty-six percent of voting share. The Code envisages the entire process, from admission to approval of a resolution plan, being completed within a statutory timeline, though extensions are common in practice.

What Creditors Should Actually Expect

Operational creditors, unlike financial creditors, do not sit on the Committee of Creditors and generally recover less, since the Code prioritises financial creditors in the distribution waterfall. Filing a timely, well-documented claim with the resolution professional, and monitoring the process rather than assuming it will resolve itself, materially affects the eventual recovery.

This note is prepared by our Banking & Insolvency team. If you are dealing with a related situation, get in touch with us.