CIRP (Corporate Insolvency Resolution Process)

IBC, 2016 — Sections 7, 9, 10, 12

The time-bound insolvency resolution process under the IBC triggered when a Corporate Debtor defaults on a financial or operational debt of ₹1 crore or more. The CIRP must be completed within 180 days (extendable to 330 days). A moratorium is imposed during CIRP, and a Committee of Creditors takes over decision-making.

In practice, CIRP is the controlled, collective alternative to one-creditor-at-a-time recovery. When a corporate debtor defaults on a financial or operational debt at or above the threshold, a creditor can trigger CIRP before the NCLT under Sections 7, 9 or 10 of the IBC. Admission is the pivotal moment: a moratorium freezes all enforcement — including SARFAESI and DRT action — the existing management is displaced, and a Committee of Creditors takes over the commercial decisions, working to a strict timeline of 180 days, extendable to 330. For a financial creditor, CIRP can be both a recovery route and a pressure tool, since the threat of management loss often prompts settlement. For an operational creditor, the leverage is real but the eventual recovery is usually subordinate. The error to avoid is treating CIRP as a debt-collection shortcut for a genuinely disputed claim — a pre-existing dispute defeats a Section 9 application. Well-advised creditors confirm an undisputed default before filing.