How to File Under IBC: The Insolvency Process for Companies in India

Under the Insolvency and Bankruptcy Code, 2016 (IBC), a financial creditor, operational creditor, or the corporate debtor itself can initiate the Corporate Insolvency Resolution Process (CIRP) against a company that has defaulted on a debt of at least Rs 1 crore (threshold revised by the Ministry of Corporate Affairs in March 2020). Applications are filed before the National Company Law Tribunal (NCLT), which is the Adjudicating Authority under Section 60 of the IBC. Once admitted, the CIRP must be completed within 180 days, extendable by 90 days, and subject to an overall cap of 330 days including litigation time under Section 12.

This guide walks you through every stage of the IBC insolvency process — from identifying the right applicant and preparing documents, to the resolution plan and liquidation — so you understand what to expect at each step. Whether you are a lender trying to recover dues or a company exploring restructuring, the process is governed by the Insolvency and Bankruptcy Code 2016 and its accompanying regulations issued by the Insolvency and Bankruptcy Board of India (IBBI).

What Is the IBC and Who Does It Cover?

The Insolvency and Bankruptcy Code, 2016 is a consolidated legislation that provides a time-bound, creditor-in-control mechanism to resolve insolvency of companies, limited liability partnerships (LLPs), partnership firms, and individuals. For companies and LLPs, the relevant process is the Corporate Insolvency Resolution Process (CIRP) under Part II of the Code. The IBC replaced a fragmented set of earlier laws including the Sick Industrial Companies Act (SICA) and relevant provisions of the Companies Act, 2013 for insolvency matters.

The Code is administered by the Insolvency and Bankruptcy Board of India (IBBI), which regulates Insolvency Professionals (IPs), Insolvency Professional Agencies (IPAs), and Information Utilities (IUs). The NCLT serves as the forum for corporate insolvency, while the National Company Law Appellate Tribunal (NCLAT) hears appeals.

Who Can Initiate the IBC Insolvency Process?

Three categories of applicants can file for CIRP under the IBC:

• Financial Creditor (Section 7): A bank, financial institution, or any party to whom a financial debt (with interest) is owed — such as a debenture holder, home buyer under a real estate project, or an assignee of debt. They can file directly upon default, without any prior demand notice.
• Operational Creditor (Section 9): A supplier of goods or services, an employee, or a government authority owed operational dues. An operational creditor must first issue a demand notice in Form 3 or Form 4 under the IBC (Application to Adjudicating Authority) Rules, 2016, and wait 10 days for either payment or a notice of dispute before filing.
• Corporate Debtor itself (Section 10): A company or LLP can file a voluntary application through its Board of Directors or designated partners, acknowledging its own default.

In all cases, the minimum default amount is Rs 1 crore. Below this threshold, the application will not be admitted.

Which Court Hears IBC Applications?

All CIRP applications for companies and LLPs are filed before the NCLT bench that has territorial jurisdiction over the registered office of the corporate debtor. India has NCLT benches in major cities including Mumbai, Delhi, Kolkata, Chennai, Hyderabad, Ahmedabad, Allahabad, Bengaluru, Chandigarh, Cuttack, and Guwahati. Appeals from NCLT orders go to the NCLAT, and further appeals on questions of law go to the Supreme Court of India.

What Documents Are Required to File?

The exact documents vary by applicant type, but the core set includes:

• Duly filled application form (Form 1 for financial creditors; Form 5 for operational creditors; Form 6 for corporate debtor — as prescribed under the IBBI (Application to Adjudicating Authority) Rules, 2016)
• Certified copy of the debt agreement, loan account statements, or invoice establishing the financial or operational debt
• Record of default from an Information Utility (currently NeSL — National e-Governance Services Limited) or other evidence of default
• Demand notice and proof of delivery (for operational creditors)
• Board resolution authorising the filing (for corporate debtor applications or company applicants)
• Proposed name or written communication from an Insolvency Professional (IP) who is willing to act as Interim Resolution Professional (IRP)
• Affidavit confirming that no disciplinary proceedings are pending against the proposed IRP
• Court fee as prescribed (discussed below)

Practical tip: Financial creditors such as banks often use NeSL to obtain a certified record of default before filing. This strengthens the application and reduces the chance of adjournment at the admission stage.

What Are the Filing Fees?

Court fees for CIRP applications are prescribed under the NCLT (Fees) Rules. As of the latest revision, the filing fee is Rs 25,000 for financial creditor applications and Rs 2,000 for operational creditor applications. Corporate debtor applications carry a fee of Rs 25,000. These fees are payable by demand draft or online through the NCLT portal. Always verify the current fee schedule on the official NCLT website or with the registry, as fees are subject to revision.

Step-by-Step: The CIRP Process Under IBC

Once the application is filed, the CIRP unfolds in defined stages under the IBC and the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016:

• Admission: NCLT examines the application. If complete and the default is established, it admits the application and declares a moratorium under Section 14 — freezing all suits, debt recovery, and asset transfers against the corporate debtor.
• Appointment of IRP: An Interim Resolution Professional is appointed (usually within 14 days of admission) to manage the company and collect claims from creditors.
• Public announcement: The IRP issues a public announcement inviting creditors to submit their claims within 14 days.
• Committee of Creditors (CoC): The IRP constitutes the CoC comprising all financial creditors. The CoC holds voting rights proportional to the debt owed to each member.
• Appointment of Resolution Professional (RP): The CoC may confirm the IRP or replace them with another IP as the Resolution Professional by a 66% vote.
• Information Memorandum: The RP prepares an Information Memorandum about the corporate debtor to assist prospective resolution applicants.
• Resolution plans: Prospective resolution applicants (investors or bidders) submit plans. The RP evaluates them against the eligibility criteria under Section 29A (which bars promoters involved in wrongdoing).
• CoC approval: The CoC must approve a resolution plan by a vote of at least 66% of voting share.
• NCLT approval: The approved plan is submitted to NCLT for final order. Once approved, it is binding on all stakeholders.
• Liquidation (if no plan): If no viable plan is approved within the timeline or if the CoC votes for liquidation, NCLT passes a liquidation order under Section 33. A liquidator is appointed to sell assets and distribute proceeds in the waterfall sequence under Section 53.

What Is the Moratorium Under Section 14?

On admission of a CIRP application, NCLT declares a moratorium — a legal freeze that prohibits: institution or continuation of suits or proceedings against the corporate debtor; enforcement of security interests; recovery of property by an owner or lessor; and transactions in securities of the corporate debtor. The moratorium remains in force throughout the CIRP and provides breathing space for resolution. It does not apply to criminal proceedings or certain regulatory actions.

What Is the Section 53 Waterfall in Liquidation?

If the process ends in liquidation, Section 53 of the IBC prescribes the priority order for distributing the liquidation estate: (1) insolvency resolution and liquidation costs; (2) secured creditors and workmen dues for 24 months; (3) other employee dues for 12 months; (4) unsecured financial creditors; (5) government dues and remaining secured creditors; (6) remaining dues; (7) equity shareholders. This hierarchy overrides conflicting provisions in other laws, as confirmed by the Supreme Court in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta (2019).

Common Mistakes to Avoid

• Filing below the Rs 1 crore threshold — the application will be rejected at the threshold stage.
• Operational creditors skipping the mandatory 10-day demand notice window before filing.
• Naming an Insolvency Professional without obtaining their written consent or checking for disciplinary proceedings.
• Incomplete documentation leading to repeated adjournments and loss of time under the 180-day clock.
• Ignoring the Section 29A eligibility bar — promoters of defaulting companies are generally ineligible to submit resolution plans.
• Missing the NCLT filing registry deadlines for supplementary documents after initial filing.

Tip: Creditors should register their claims with the IRP promptly after the public announcement. Late claims may not be accepted and creditors risk losing their seat on the Committee of Creditors.

When Should You Consult an Advocate or Insolvency Professional?

The IBC insolvency process involves strict statutory timelines, technical documentation, and specialised forums. Legal representation by an advocate experienced in insolvency matters significantly reduces the risk of procedural errors that can cost you your place in the process. Similarly, only a registered Insolvency Professional (IP) listed with the IBBI can act as an IRP or RP — this is not a role a general manager or director can fill. If you are a creditor considering filing, a corporate debtor exploring voluntary insolvency, or a resolution applicant evaluating a bid, obtaining professional advice at the earliest is strongly recommended. You can browse advocates by city and practice area on LegalFirms.in to find insolvency law specialists near you, or explore answered questions on Business and Corporate law for general guidance. You may also ask a legal question to understand your options better.

For related reading on how business structures affect insolvency liability, see our guide on Business Structures in India: Sole Proprietorship to Private Limited. You can also explore additional legal guides on LegalFirms.in covering a wide range of business law topics.

This guide is general legal information, not legal advice. Laws and procedures may vary by state and change over time. Consult a qualified advocate for advice specific to your situation.

Step-by-Step Process