Adjudicating Authority

IBC, 2016 — Section 5(1)

Under the Insolvency and Bankruptcy Code, 2016, the National Company Law Tribunal (NCLT) is the Adjudicating Authority for corporate persons. It admits or rejects CIRP petitions, approves resolution plans, and passes liquidation orders.

In practice, the Adjudicating Authority is the gateway and the gatekeeper of corporate insolvency. Under Section 5(1) of the Insolvency and Bankruptcy Code, 2016, the National Company Law Tribunal admits or rejects CIRP petitions, and that single admission order changes the entire dynamic of a defaulting account, the moratorium kicks in, management shifts, and individual recovery actions including SARFAESI freeze. A financial or operational creditor must satisfy the NCLT that a default has occurred and the application is complete; defects in the petition, disputed debt, or a pending pre-existing dispute can lead to rejection. The same authority later approves or rejects the resolution plan and orders liquidation, so its rulings determine whether a creditor recovers through resolution or through the liquidation waterfall. Borrowers and corporate debtors contest admission vigorously because so much turns on it. Well-advised creditors confirm default, debt and documentation are watertight before approaching the Adjudicating Authority.