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Section 4(1) applies Part II where the minimum amount of the default is Rs. 1 crore. The figure was substituted for "one lakh rupees" by notification S.O. 1205(E) with effect from 24 March 2020. A financial creditor under Section 7 or an operational creditor under Section 9 can therefore file only where the default is Rs. 1 crore or more. For smaller defaults, creditors use the other remedies available to them — the DRT (under the RDB Act, 1993, where the debt due is Rs. 20 lakh or more), civil courts, or SARFAESI enforcement where it applies.
Under Section 12, the CIRP must be completed within 180 days from admission. On the resolution professional's application, made when instructed by a CoC resolution passed by 66% of voting share, the NCLT may extend it once by up to 90 days. The second proviso to Section 12(3) says the CIRP shall be completed within 330 days from the insolvency commencement date, including any extension and the time taken in legal proceedings; in Committee of Creditors of Essar Steel v. Satish Kumar Gupta (2019) the Supreme Court struck down the word "mandatorily" in that proviso, so the outer limit may be exceeded in exceptional cases. If no plan reaches the NCLT in time, it does not order liquidation at once: since 26 May 2026 it must first consider any CoC application (66%) to restore the CIRP, once, for up to 120 days (Section 33(1A)–(1B)).
On admission, the NCLT declares a moratorium under Section 14 that stays pending suits and proceedings against the corporate debtor — including DRT proceedings and execution of decrees — and prohibits enforcement of any security interest, including action under SARFAESI. The moratorium does not apply to "a surety in a contract of guarantee to a corporate debtor" (Section 14(3)(b)), so banks can continue against personal and corporate guarantors while the borrower company is in CIRP. Banks should file their financial creditor claims with the interim resolution professional by the date stated in the public announcement.
Section 29A does not bar promoters as such; it lists grounds on which a person — together with anyone acting jointly or in concert with it — is ineligible. They include being an undischarged insolvent, a wilful defaulter under RBI guidelines, and (clause (c)) having an account, or controlling or promoting a corporate debtor with an account, classified as a non-performing asset for at least one year before the CIRP commenced. A clause (c) disqualification is cured if all overdue amounts with interest and charges are paid before the plan is submitted, and clause (c) does not apply to a financial entity that is not a related party of the corporate debtor. Section 29A was inserted with effect from 23 November 2017 (Act 8 of 2018).
Each financial creditor's voting share is its proportion of the financial debt owed by the corporate debtor to the CoC members who are eligible to vote (Section 5(28), as amended in 2026). Unless the Code provides otherwise, CoC decisions need not less than 51% of voting share (Section 21(8)). The Code requires not less than 66% for approving a resolution plan (Section 30(4)), instructing the resolution professional to seek an extension of the CIRP (Section 12(2)), appointing or replacing the resolution professional (Sections 22(2) and 27(2)), approving the actions listed in Section 28 (Section 28(3)), and deciding to liquidate or dissolve the corporate debtor (Section 33(2)). Withdrawal of an admitted application needs 90% (Section 12A).
Section 53(1) sets the order: first, insolvency resolution process costs and liquidation costs; second, ranking equally, workmen's dues for 24 months and debts of secured creditors who have relinquished their security — but only up to the value of the security relinquished, with the balance treated as unsecured (Explanation inserted in 2026); third, employees' dues for 12 months; fourth, financial debts owed to unsecured creditors; fifth, ranking equally, government dues for the two years before the liquidation commencement date and secured creditors' shortfall after enforcing their security; then remaining debts, preference shareholders and equity shareholders. Banks with security can instead realise it under Section 52, but must elect within 14 days of liquidation commencing, and any shortfall falls into the fifth class.
Yes — until the CIRP application is admitted. A bank can issue a Section 13(2) SARFAESI demand notice and take the later enforcement steps while a Section 7 application is pending before the NCLT. Once the application is admitted, the Section 14 moratorium prohibits "any action to foreclose, recover or enforce any security interest", including action under SARFAESI. After a resolution plan is approved, claims against the corporate debtor and its assets are dealt with as the plan provides; unless the plan provides otherwise, earlier claims against the corporate debtor and its assets are extinguished (Section 31(6)).
Insolvency resolution and bankruptcy of personal guarantors to corporate debtors run under Part III (Sections 94 to 187, brought into force for personal guarantors from 1 December 2019 by notification S.O. 4126(E)), but the Adjudicating Authority is the NCLT, not the DRT: the NCLT having jurisdiction over the corporate debtor's registered office, or the NCLT where the corporate debtor's CIRP or liquidation is pending (Section 60(1)–(2)). The Section 14 moratorium protecting the corporate debtor does not extend to sureties, as the Supreme Court confirmed in State Bank of India v. V. Ramakrishnan (2018). Since 26 May 2026, an application concerning a personal guarantor to a corporate debtor triggers no interim moratorium (Section 96(4)). An approved resolution plan for the corporate debtor does not affect claims or proceedings against its guarantors (Section 31(6), Explanation I).
Resolution (Sections 30–31) means the corporate debtor continues as a going concern under a resolution plan approved by the CoC and the NCLT; creditors are paid as the plan provides, subject to the statutory floors for operational creditors and dissenting financial creditors. Liquidation (Sections 33–54) means the company's assets are sold and the proceeds distributed in the Section 53 order, with the CoC supervising the liquidator since 26 May 2026. The Code prefers resolution: before ordering liquidation because no plan was received or the plan was rejected, the NCLT must consider a CoC application to restore the CIRP (Section 33(1A)).
Commercial dissatisfaction alone is not a ground. Section 61(3) limits appeals against an order approving a resolution plan to: (i) contravention of any law, (ii) material irregularity by the resolution professional, (iii) operational creditors' debts not provided for in the manner specified by the Board, (iv) process costs not paid in priority, and (v) non-compliance with other Board criteria. The Supreme Court in Essar Steel (Committee of Creditors v. Satish Kumar Gupta, 2019) held that NCLAT cannot substitute its commercial judgment for that of the CoC. A plan that does not meet the statutory floors — for operational creditors, the higher of their liquidation amount and their Section 53(1) waterfall share (Section 30(2)(b)); for financial creditors who did not vote in favour, the lower of those two amounts (Section 30(2)(ba), from 26 May 2026) — fails Section 30(2) and the NCLT can approve only a plan that meets it (Section 31(1)).
Whether you are a financial creditor filing under Section 7, an operational creditor filing under Section 9, or a corporate debtor defending an insolvency application, IBC proceedings require specialist counsel. Our team handles NCLT and NCLAT matters.