MODULE-3

Corporate Insolvency Resolution Process (CIRP)

1. Introduction
The Corporate Insolvency Resolution Process (CIRP) is the legal procedure through which a
financially distressed corporate entity (company) can either be revived or liquidated.
CIRP was introduced by the Insolvency and Bankruptcy Code, 2016 (IBC) to ensure:
 Maximization of the value of assets.
 Promotion of entrepreneurship.
 Availability of credit.
 Balancing of interests of all stakeholders.
🔹 Relevant Act: Insolvency and Bankruptcy Code, 2016 (IBC)
🔹 Part: Part II of IBC (Section 4 to Section 77)
🔹 Applicable to: Corporate Persons (Companies, LLPs, but not financial service providers like
banks)

2. Important Definitions (IBC)

Term Meaning Section

A corporate person who owes a debt to any
Corporate Debtor Section 3(8)
person.
Financial Creditor A person to whom a financial debt is owed. Section 5(7)
Operational Creditor A person to whom an operational debt is owed. Section 5(20)
Insolvency Commencement Date on which the application is admitted by
Section 5(12)
Date NCLT.

3. When can CIRP be initiated?

Default of ₹1 crore or more.
(Earlier it was ₹1 lakh; increased by notification dated 24.03.2020 to ₹1 crore due to COVID-
19.)

Who can initiate:

 Financial Creditor (Section 7)
 Operational Creditor (Section 9)
 Corporate Debtor itself (Section 10)

4. Procedure of CIRP

Step 1: Filing of Application

 Financial creditor: Directly files under Section 7, along with record of default (e.g.,
CIBIL, NeSL).
 Operational creditor: Must first serve a Demand Notice (Section 8). If unpaid, then file
under Section 9.
 Corporate debtor: Can initiate suo motu under Section 10.
📍 Tribunal: National Company Law Tribunal (NCLT) (jurisdiction where company’s
registered office is located)

Step 2: Admission or Rejection by NCLT

 NCLT must admit or reject the application within 14 days.
  Upon admission:
o Moratorium declared under Section 14.
o Interim Resolution Professional (IRP) appointed.
o Public announcement made inviting claims.

Step 3: Moratorium (Section 14)

Moratorium means a temporary prohibition on:
 Institution or continuation of suits.
 Transfer, encumbrance, alienation of assets.
 Foreclosure, recovery, or enforcement of security interests.
👉 Purpose: To ensure company remains a going concern.

Step 4: Interim Resolution Professional (IRP) and Resolution Professional (RP)

 IRP is appointed initially (Section 16).
 IRP manages the affairs of the corporate debtor.
 IRP constitutes the Committee of Creditors (CoC).
 Later, CoC may confirm IRP as Resolution Professional or appoint someone else
(Section 22).

Step 5: Committee of Creditors (CoC) (Section 21)

 Comprises all financial creditors.
 Decisions taken by 66% voting share (earlier 75%).
 Role: Major decision-making body — approve resolution plan, liquidation, etc.

Step 6: Submission and Approval of Resolution Plan

 Resolution Applicant submits a plan.
 Plan must:
o Pay operational creditors at least liquidation value.
o Ensure maximization of value of assets.
o Provide for management of the affairs of corporate debtor.
 Approval of Resolution Plan: Requires 66% CoC voting share.
 Approved Plan is binding on all stakeholders once approved by NCLT.
🔹 Relevant Sections:
 Section 30 – Submission of Resolution Plan
 Section 31 – Approval of Plan

Step 7: Timeline
 CIRP must be completed in 180 days, extendable by 90 days (total 270 days).
 In special cases (due to COVID-19 or complex matters), it may be extended up to 330
days including litigation time (Supreme Court in Essar Steel case).

5. Failure to Resolve → Liquidation

If:
 No Resolution Plan is received within prescribed time.
 CoC decides to liquidate with 66% votes.
 Resolution Plan is rejected by NCLT.
Then, Liquidation is ordered under Section 33.

6. Important Case Laws

Case Name Importance
Innoventive Industries Ltd. v. ICICI
First landmark case explaining IBC.
Bank
Case Name Importance
Swiss Ribbons Pvt. Ltd. v. Union of
Upheld constitutional validity of IBC.
India
Essar Steel India Ltd. v. Satish Kumar Clarified CoC's primacy, timeline of 330 days,
Gupta importance of value maximization.
Mobilox Innovations Pvt. Ltd. v. Kirusa Defined ‘dispute’ under Section 9 — genuine disputes
Software Pvt. Ltd. must not trigger CIRP.

7. Key Principles Evolved

 Creditors in control: Once CIRP is initiated, management shifts from promoters to CoC.
 Time-bound process: Strict timelines (180+90 days).
 Value maximization: Focus is to revive, not to kill the company.
 Balance of interests: Both financial and operational creditors are considered.

8. Recent Developments
 Pre-pack Insolvency Resolution for MSMEs introduced by IBC (Amendment)
Ordinance, 2021.
 Threshold for initiation raised from ₹1 lakh to ₹1 crore (COVID-19 measure).
 Suspension of new CIRPs for defaults occurring during COVID-19 period (Section
10A).

Important Sections to Remember

Section Topic
7 Application by Financial Creditor
8 & 9 Demand Notice and Application by Operational Creditor
10 Application by Corporate Debtor
14 Moratorium
16 Appointment of IRP
21 Constitution of CoC
30 Submission of Resolution Plan
31 Approval of Resolution Plan
33 Liquidation process

Initiating an Application for Resolution under IBC

1. Introduction

Initiating an application for Resolution under the Insolvency and Bankruptcy Code, 2016 (IBC)
means filing a petition before the National Company Law Tribunal (NCLT) to commence
the Corporate Insolvency Resolution Process (CIRP) against a defaulting corporate debtor.

🔹 Objective:
To trigger insolvency proceedings so that either:

 The corporate debtor is revived through a resolution plan, or

 If revival is not possible, it goes into liquidation.

2. Who can initiate an application?

Under the IBC, 3 parties are eligible to initiate CIRP:
Relevant
Who Requirements
Section
Financial Creditor Section 7 File directly based on default.
First issue Demand Notice (Section 8); if unpaid, then
Operational Creditor Section 9
file application.
Corporate
Section 10 Debtor itself admits inability to pay debts and files.
Debtor (Self)

3. Basic Pre-conditions

 A "default" must have occurred.

 Minimum amount of default = ₹1 crore (after 24.03.2020 Notification).
 Application must be filed to jurisdictional NCLT (where registered office of the
corporate debtor is located).

🔹 Default means non-payment of debt when due and payable.

4. Step-by-Step Procedure

(A) For Financial Creditor (Section 7)

Direct Application

1. File Form 1 along with:

o Evidence of default (bank records, information utility record, etc.).
o Details of the corporate debtor.
o Proposed name of Interim Resolution Professional (IRP) (optional).
2. NCLT must ascertain existence of default within 14 days of receipt.
3. If satisfied → Admission and commencement of CIRP.

🔹 Case Law: Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407:
➔ Financial creditor needs to only prove default, not existence of dispute.

(B) For Operational Creditor (Section 9)

2-Step Process

1. Send a Demand Notice under Section 8:

o Serve demand notice demanding unpaid operational debt (10 days’ time given to
debtor to respond).
o If debtor disputes the debt — application may be rejected.
o If no payment/no dispute — creditor can proceed.
2. File Application (Form 5) under Section 9:
o Attach invoices, bank statements, demand notice, proof of service, etc.
o Propose IRP (optional).
3. NCLT will admit or reject application within 14 days.
🔹 Important Case Law: Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., (2018)
1 SCC 353: If there is a genuine pre-existing dispute, CIRP cannot be initiated.

(C) For Corporate Debtor Itself (Section 10)

Voluntary admission

1. Company Board passes resolution to file under Section 10.

2. Application must include:
o Special Resolution by shareholders (or 3/4th partners in LLP).
o Books of account.
o Details of existing financial position.
3. Proposed name of IRP must be given.
4. NCLT examines and admits within 14 days.

🔹 Note: After IBC Amendment Act, 2020, promoters of companies facing Section 29A
disqualification (like wilful defaulters) cannot misuse Section 10.

5. Important Documents Required

Document Purpose
Demand Notice (for Operational Creditors) To initiate under Section 9
Copy of Loan Agreement, Ledger, Bank Records Evidence of debt/default
Record from Information Utility (NeSL) Proof of default (strong evidence)
Affidavit verifying no dispute (Section 9) In case of operational creditors
Special Resolution (Section 10 cases) If debtor itself files

6. Post Admission by NCLT

Upon admission:

 Moratorium under Section 14 begins.

 Interim Resolution Professional (IRP) appointed.
 Public announcement inviting claims from all creditors.
 CIRP timeline of 180 days starts.

7. Timeline Overview
Stage Time Limit
Filing to Admission/Rejection by NCLT 14 days
Response to Demand Notice by Corporate Debtor (for
10 days
Operational Creditors)
180 days (extendable to 270/330
Completion of CIRP
days)

8. Key Principles

 Financial Creditor has simple burden: Prove default, not disputes.

 Operational Creditor must prove both existence of debt and absence of dispute.
  Corporate Debtor can initiate CIRP voluntarily to seek resolution and revival.

Role, Functions, and Powers of Interim Resolution Professional (IRP) –

1. Introduction

The Interim Resolution Professional (IRP) is the first insolvency professional appointed once
a Corporate Insolvency Resolution Process (CIRP) is initiated under the Insolvency and
Bankruptcy Code, 2016 (IBC).

🔹 Purpose:
To take over the management of the corporate debtor and stabilize its operations until
the Committee of Creditors (CoC)is formed and a full-time Resolution Professional (RP) is
appointed.

2. Relevant Sections
Section Title
Section 16 Appointment and Tenure of IRP
Section 17 Management of Affairs by IRP
Section 18 Duties of IRP
Section 19 Personnel to cooperate with IRP
Section 20 Management and Preservation of Corporate Debtor's Value
Section 23 RP to conduct CIRP (initially IRP acts till RP is appointed)

3. Appointment of IRP (Section 16)

 When?
As soon as NCLT admits an insolvency application under Section 7, 9, or 10.
 Who appoints? NCLT appoints the IRP.
 Timeline:
o For Financial Creditor's application: within 14 days.
o IRP is proposed by applicant creditor or appointed by NCLT if no name is
proposed.
 Tenure: Till the CoC is formed and RP is confirmed or replaced (maximum 30
days from date of appointment).

🔹 Important:
After formation of CoC, IRP can either be:

 Confirmed as the full Resolution Professional, or

 Replaced by another RP under Section 22.

4. Functions of Interim Resolution Professional (Section 18)

🔵 Primary Functions:
Function Description
Take Control Take control and custody of all assets and records of the corporate debtor.
Collect Claims Receive and collate all claims submitted by creditors.
Function Description
Constitute CoC Verify claims and constitute the Committee of Creditors (CoC).
Manage Operations Manage daily operations of corporate debtor as a going concern.
Represent Act on behalf of corporate debtor in all legal proceedings.
Information Prepare a basic information memorandum (preliminary business/financial
Memorandum data) for prospective resolution applicants.

5. Powers of Interim Resolution Professional (Sections 17 & 20)

🔵 Section 17: Management Powers

Power Details
Management Shift Management of corporate debtor vests with IRP.
Powers of board of directors or partners of corporate debtor are
Board of Directors
suspended.
Exercise of Powers Officers and managers of corporate debtor report to IRP.

🔵 Section 20: Power to Preserve Value

Action Details
Continue Operations IRP ensures that debtor continues as a "going concern."
Raise Interim Finance Can raise interim finance with CoC approval to keep operations alive.
Protect Assets IRP takes necessary steps to protect and preserve the assets.
Appoint Professionals IRP can appoint accountants, valuers, lawyers as needed.

🔹 Important:
IRP cannot sell or dispose of assets unless it is necessary for business operations.

6. Duties under Section 18 (Elaborated)

 Take control of all properties (both located in India and abroad).

 Keep records updated.
 Collect financial information from information utilities, banks, creditors, etc.
 Constitute Committee of Creditors based on verified claims.
 Prepare Information Memorandum which is crucial for inviting Resolution Plans.

7. Duties under Section 19: Cooperation by Personnel

 All personnel of the corporate debtor (employees, directors, etc.) must cooperate with
the IRP.
 If there is non-cooperation, IRP can move NCLT to seek appropriate directions.

8. Restrictions on IRP

 Cannot decide on approval of Resolution Plans. (Only CoC and later NCLT can.)
 Cannot sell assets (except in ordinary course of business).
 Limited term – acts only till CoC appoints RP.
9. Important Case Laws
Case Name Principle
SBI v. Ram Dev International IRP is custodian of corporate debtor, not an agent
Ltd. (NCLAT, 2018) of creditors.
ICICI Bank Ltd. v. Innoventive Industries Emphasized that IRP must preserve the corporate
Ltd., (2018) 1 SCC 407 debtor as a going concern during CIRP.
Alok Infrastructure Ltd. v. IRP of Alok IRP can seek cooperation orders from NCLT if
Industries Ltd. (NCLAT, 2017) debtor's management obstructs.

10. Comparison: IRP vs RP

Interim Resolution Professional
Criteria Resolution Professional (RP)
(IRP)
Appointment By NCLT on admission By CoC after confirmation
Tenure Temporary (max 30 days) Till approval of resolution plan or liquidation
Detailed management, conduct CIRP, invite
Role Initial takeover and stabilization
resolution plans

Committee of Creditors (CoC): Powers, Duties, and Processes – Detailed Class Notes

1. Introduction

The Committee of Creditors (CoC) is the supreme decision-making body during the Corporate
Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC).

🔹 Purpose:
To represent the financial interests of creditors and decide the future of the corporate debtor,
either by approving a resolution plan or opting for liquidation.

2. Relevant Sections
Section Title
Section 21 Committee of Creditors
Section 22 Appointment of Resolution Professional
Section 23 RP to conduct CIRP
Section 24 Meetings of Committee of Creditors
Section 25 Duties of Resolution Professional in relation to CoC
Section 30(4) Approval of Resolution Plan by CoC
Section 33(2) Liquidation Decision by CoC

3. Constitution of CoC (Section 21)

🔵 Who Constitutes? The Interim Resolution Professional (IRP) constitutes the CoC after
collating claims.

🔵 Who are Members?

 Financial Creditors ONLY form the CoC.

  In case of absence of financial creditors (e.g., only operational creditors), the CoC is
constituted of 18 largest operational creditors and one representative of workmen and one
for employees.

🔵 Voting Share:

 Based on the proportion of financial debt owed.

🔵 Special Situations:

 Related party financial creditors have no voting rights in the CoC (Section 21(2)).

4. Key Powers of CoC

Power Section/Provision Details
Appoint/Replace RP Section 22 Confirm or replace IRP as Resolution Professional.
Approve Resolution
Section 30(4) Approve a resolution plan with 66% voting share.
Plan
Can resolve to liquidate debtor by 66% vote even
Decide Liquidation Section 33(2)
before completion of CIRP.
Approve Extension of Approve extension of CIRP beyond 180 days (up to
Section 12(2)
CIRP 90 additional days).
During CIRP (interim finance, critical assets) with
Approve Sale of Assets General
RP proposals.
Approve Interim Approve loans needed to keep the company going
Section 20(2)(c)
Finance during CIRP.
Not formally CoC can engage in negotiation with prospective
Negotiate with Bidders
codified resolution applicants.

5. Duties and Responsibilities of CoC

🔵 Fiduciary Responsibility: CoC must act in good faith and protect the interests of all
stakeholders, not just their own.

🔵 Active Participation: Attend and vote in meetings; Evaluate and examine resolution plans
fairly.

🔵 Commercial Wisdom Doctrine: Courts (NCLT/NCLAT/Supreme Court) respect

CoC’s "commercial wisdom" – meaning CoC's business decisions aren't lightly interfered with.

🔵 Ensure Fairness:
 Ensure plans are fair to operational creditors too.
 Protect rights of workmen and employees.

🔵 Transparency: CoC must act transparently while inviting, negotiating, and approving
resolution plans.

6. Process of CoC Meetings (Section 24)

🔵 First Meeting: Convened by IRP within 7 days of CoC formation.

🔵 Who Can Attend?

 Financial Creditors (Members)

 Resolution Professional (RP)
 Representatives of operational creditors (without voting rights) if applicable
 Suspended directors and Key Managerial Personnel (only for information, no voting).

🔵 Notice of Meeting: At least 5 days before the meeting.

🔵 Quorum: As decided by CoC regulations (usually 33% of voting share).

🔵 Voting Thresholds:
Decision Required Majority
Major Decisions (e.g., plan approval, liquidation) 66% of voting share
Routine matters 51% of voting share

🔹 Note: Voting can also happen through electronic means.

7. Important Case Laws

Case Name Principle
K. Sashidhar v. Indian
Courts cannot interfere with CoC’s commercial decision to
Overseas Bank, (2019) 12
approve/reject resolution plan unless illegal.
SCC 150
Essar Steel India Ltd. v. Supreme Court emphasized supremacy of CoC’s commercial
Satish Kumar Gupta, (2020) wisdom; operational creditors' interests must be considered but
8 SCC 531 final decision lies with CoC.

Practical Importance of CoC’s Role

1. Protects financial ecosystem by ensuring recovery for banks and institutions.

2. Balances competing interests: financial creditors, operational creditors, employees,
government dues.
3. Ensures continuity: by selecting plans that revive the company or, if not possible,
ensuring smooth liquidation.

9. Challenges faced by CoC

 Coordination issues between creditors.

 Conflicts between secured and unsecured creditors.
 Allegations of favoritism towards particular resolution applicants.
 Balancing recovery with the interest of operational creditors.

Part 1: Information Memorandum (IM)

1. Introduction
The Information Memorandum (IM) is a confidential document prepared during the Corporate
Insolvency Resolution Process (CIRP) containing all critical information about the corporate
debtor, which helps potential Resolution Applicants to prepare and submit a Resolution Plan.

🔹 Purpose:

 To provide a fair, transparent, and comprehensive picture of the corporate debtor’s

financial and operational status.
 To attract suitable bidders and enable informed decision-making.

2. Relevant Provisions
Section / Regulation Title
Section 29 Preparation of Information Memorandum
Regulation 36 of CIRP Regulations Contents of Information Memorandum

3. Who Prepares the IM?

 Resolution Professional (RP) prepares the IM.

 Must be shared only with eligible and interested Resolution Applicants after they sign
a confidentiality undertaking.

4. Time Limit for Preparation

 IM must be shared before issuing the Request for Resolution Plan (RFRP).
 Generally prepared within 54 days of commencement of CIRP (as per process timelines).

5. Contents of the IM (Regulation 36(2))

The IM must contain details such as:

Category Key Information
Assets Fixed and current assets, realizable value, security interests.
Liabilities Secured and unsecured liabilities, contingent liabilities.
Financial Statements Past 3 years audited financials.
Claims List of creditors, amounts admitted, security interests.
Litigation Details of legal proceedings pending against the company.
Guarantees Corporate or personal guarantees given or received.
Contracts and Agreements Material contracts affecting operations.
Employees Number of employees, their claims.
Other Material Information Anything which may affect valuation.

6. Confidentiality Obligation

 IM is strictly confidential.
 Shared only after signing a Non-Disclosure Agreement (NDA) under Section 29(2).
 Unauthorized disclosure leads to penalties under IBC.
7. Case Reference
Case Principle
SBI v. Metenere Ltd., Only authorized and eligible applicants who sign the confidentiality
NCLAT (2020) undertaking can access the IM.

Part 2: Resolution Plan

1. Introduction

A Resolution Plan is a proposal made by a Resolution Applicant for the revival of the corporate
debtor. It seeks to maximize asset value and satisfy the claims of creditors as much as possible.

🔹 Purpose: To either revive, restructure, merge, or otherwise resolve the corporate debtor's
insolvency.

2. Relevant Provisions
Section / Regulation Title
Section 5(26) Definition of Resolution Plan
Section 30 Submission and contents of Resolution Plan
Section 31 Approval of Resolution Plan
Regulation 37 Measures permissible under Resolution Plan
Regulation 38 Mandatory contents of Resolution Plan

3. Who Can Submit? Resolution Applicant: Any person who submits a Resolution Plan
after Expression of Interest (EOI) process. Must meet eligibility norms under Section 29A (i.e.,
not disqualified).

4. Contents of Resolution Plan (Section 30(2) + Regulation 38)

🔹 The Resolution Plan must mandatorily provide:

Requirement Details
Plan for insolvency resolution costs, operational creditors (not less than
Payment to Creditors
liquidation value).
Management How management and control will be taken over.
Feasibility and
Clear steps to ensure revival.
Viability
Compliance Conformity with existing laws and regulations.
Payments made in the order of priority as specified in Section 53
Priority
(Waterfall mechanism).
Dealing with
Terms for operational creditors, employees, statutory dues, etc.
Stakeholders

5. Approval Process (Section 30(4))

Step Detail
Evaluation RP places eligible plans before CoC.
CoC Approval CoC approves the plan with at least 66% of voting share.
Step Detail
Submission to
RP submits CoC-approved plan to NCLT for final approval under Section 31.
NCLT
Once approved by NCLT, plan is binding on all stakeholders (debtor,
Binding Nature
creditors, employees, guarantors, government).

6. Permissible Measures under Resolution Plan (Regulation 37)

A Resolution Plan may provide for:

 Restructuring of corporate debtor's business.

 Merger, amalgamation, or demerger.
 Sale or transfer of assets.
 Change in capital structure (issue of new shares).
 Reduction of claims or haircuts.
 Setting up of trusts for creditor benefit.
 Any other mechanism necessary for effective resolution.

Common Grounds of Rejection by NCLT

 Non-compliance with Section 30(2) conditions.

 Discriminatory treatment between different classes of creditors.
 Plans submitted by ineligible persons (violating Section 29A).
 Plans not feasible or viable.

Fast Track Corporate Insolvency Resolution Process (Fast Track CIRP)

1. Introduction: Fast Track Corporate Insolvency Resolution Process (Fast Track CIRP) is
a time-bound insolvency process under the Insolvency and Bankruptcy Code, 2016 (IBC), aimed
at speedy resolution for smaller companies or companies meeting specific criteria.
It is a simplified, shorter version of the regular CIRP and is completed in a significantly lesser
time period.

🔹 Purpose:

 To facilitate quick resolution for corporate debtors who have simple business structures
and smaller asset bases.
 To reduce cost and time involved in insolvency proceedings.

2. Statutory Provisions
Provision Title
Fast Track Insolvency
Section 55 to Section 58 of IBC, 2016
Process
Regulation 4 of IBBI (Fast Track Insolvency Resolution Process for
Process Regulations
Corporate Persons) Regulations, 2017
Governs Fast Track
Notification No. IBBI/2017-18/GN/REG010
CIRP
3. Eligibility for Fast Track Process (Section 55(2))

The Fast Track process applies to the following types of Corporate Debtors:

 Small Companies (as defined under Section 2(85) of the Companies Act, 2013).
 Start-ups (other than partnership firms) (as defined under the Companies Act, 2013).
 Unlisted Companies with:
o Total assets not exceeding ₹1 crore as per the latest audited financial statement.
 Other classes of corporate persons as may be notified by the Central Government.

5. Process Flow of Fast Track CIRP

Stage Description
Application to Adjudicating Authority (NCLT) by Financial Creditor,
Initiation
Operational Creditor, or Corporate Debtor itself.
Admission by NCLT If criteria under Section 55(2) met, NCLT admits the application.
Interim Resolution Professional (IRP) is appointed to manage the
Appointment of IRP
debtor's affairs.
Formation of CoC Committee of Creditors formed and first meeting convened.
Preparation of IM IRP/RP prepares Information Memorandum.
Invitation for
Resolution Applicants submit plans.
Resolution Plans
Approval of Plan Plan approved by CoC with 66% voting share and submitted to NCLT.
Closure NCLT approves the Resolution Plan or orders liquidation.

6. Time Period
Time Limit Section
Section 56(1): Entire process must be completed within 90 days from insolvency
90 days
commencement date.
Section 56(3): A one-time extension of up to 45 days can be granted by NCLT if
Extension
necessary.

Total Maximum Period = 135 days (90 days + 45 days extension)

🔹 Important:

 No further extensions beyond 135 days are allowed under law.

7. Application for Fast Track CIRP

Requirement Detail
Documents Application must include proof of eligibility (balance sheets, certificate of
Needed incorporation, asset valuation reports).
Proof of
Must satisfy conditions of Section 55(2).
Eligibility
NCLT’s
NCLT must be satisfied that the corporate debtor meets Fast Track criteria.
Satisfaction

8. Important Features
✅ Shorter Timeframe (90–135 days)
✅ Cost-Effective
✅ Simplified Procedures
✅ Targeted at Small Companies, Start-ups, and Unlisted Companies
✅ Encourages early detection of financial distress and quick revival.

9. Role of Resolution Professional (RP) in Fast Track

 Same as regular CIRP but timelines are compressed.

 Must act more swiftly to:
o Verify claims quickly.
o Formulate and convene CoC at earliest.
o Prepare Information Memorandum rapidly.
o Invite, negotiate, and submit Resolution Plans.
 Must ensure strict adherence to procedural regulations as any delay is fatal.

11. Key Judicial Pronouncements

Case Principle
Punjab National Bank v. Emphasized the objective of fast track mechanism is to balance
Lanco Infratech Ltd. revival with minimal delay.
In the matter of JBK Realty NCLT permitted fast track CIRP when corporate debtor’s asset
Pvt. Ltd., NCLT Mumbai base and business structure satisfied the criteria, despite minor
(2020) procedural objections.

12. Challenges in Fast Track CIRP

🔹 Ensuring adherence to strict timelines.

🔹 Limited time to attract genuine resolution applicants.
🔹 Difficulty in conducting detailed due diligence.
🔹 Risk of undervaluation due to hurried processes.
🔹 Limited applicability – applies only to a small class of companies.

13. Future Prospects

 Fast Track CIRP can be a game-changer if extended to other categories like MSMEs
widely.
 Helps reduce burden on NCLT benches.
 Aids in promoting the Ease of Doing Business.
 Government considering further enabling regulations to allow more flexibility.

✍️Conclusion

Fast Track CIRP under Sections 55–58 of IBC offers a simplified, quicker, and cost-effective
resolution mechanism for small, uncomplicated companies. While it accelerates the insolvency
resolution process, strict compliance with timelines and proper implementation are key to its
success.
It is an important step toward making India’s insolvency regime efficient, investor-friendly, and
less burdensome for smaller businesses.
90 days + 45 days (extension) = Max 135 days
Cross-Border Insolvency

1. Introduction

Cross-Border Insolvency refers to situations where an insolvent debtor has assets, creditors,
or operations in more than one country. In today's global economy, insolvency cases often
involve multiple jurisdictions, and thus, require a mechanism to coordinate and manage
insolvency proceedings across borders.

🔹 Primary Issues in Cross-Border Insolvency:

 Recognition of foreign insolvency proceedings.

 Cooperation between courts of different countries.
 Protection of rights of international creditors.
 Jurisdictional conflicts.

2. Importance of Cross-Border Insolvency Mechanism

 Global companies often operate in multiple jurisdictions.

 Insolvency of a multinational can affect creditors worldwide.
 Need for orderly distribution of assets and protection of stakeholders.
 Avoidance of forum shopping and conflicting judgments.

3. Indian Legal Framework

Currently, India does not have a comprehensive law governing cross-border insolvency.
However, certain provisions exist under the Insolvency and Bankruptcy Code, 2016 (IBC):
Section Provision
Section
Agreements with foreign countries for enforcing the IBC provisions.
234
Section Letter of Request to a foreign country to seek evidence or action in relation to
235 insolvency proceedings.

🔹 Status: These provisions are not yet operational (no agreements signed yet under Section 234
as of now).

4. Explanation of Key Sections

a. Section 234 – Agreements with Foreign Countries

 Central Government may enter into bilateral agreements with foreign countries.
 Purpose: Enforcement of insolvency orders in each other’s territories.
 Without such agreements, enforcement becomes difficult.

b. Section 235 – Letter of Request

 If assets of the Corporate Debtor are located abroad, the Adjudicating Authority (NCLT)
can issue a Letter of Request to a court/authority in the foreign country.
 The Letter requests cooperation for taking evidence, protecting assets, etc.
5. International Model Law – UNCITRAL Model Law, 1997

The UNCITRAL Model Law on Cross-Border Insolvency is a globally accepted legal

framework providing effective mechanisms for:

 Cooperation between courts and insolvency professionals.

 Fair and efficient administration of cross-border insolvencies.

🔹 Key Principles of UNCITRAL Model Law:

1. Access: Foreign insolvency representatives and creditors can access domestic courts.
2. Recognition: Domestic courts must recognize foreign insolvency proceedings.
3. Relief: Courts may grant interim relief (stay of proceedings, freezing of assets).
4. Cooperation: Domestic and foreign courts must cooperate.

🔹 Countries that have adopted:

USA (Chapter 15, Bankruptcy Code), UK, Australia, Singapore, South Africa, Japan, etc.

6. India’s Proposed Adoption of UNCITRAL Model Law

The Insolvency Law Committee (ILC) 2018 recommended adoption of the UNCITRAL Model
Law with certain modifications for India.

Key Highlights of Proposed Indian Framework:

 Application limited to corporate debtors initially (not individuals or partnerships).
 Central Government to notify Reciprocal Jurisdictions (countries with cooperation).
 Public policy exception: Indian authorities can refuse recognition if against India's public
policy.
 Emphasis on Centre of Main Interests (COMI) for determining primary jurisdiction.

7. Important Concepts in Cross-Border Insolvency

Concept Explanation
Location where the debtor conducts the administration of its interests
Centre of Main
regularly and is therefore ascertainable by third parties (presumption:
Interests (COMI)
registered office).
Main Proceedings Insolvency proceedings taking place in the COMI jurisdiction.
Non-Main Insolvency proceedings taking place outside COMI, where debtor has an
Proceedings establishment.
Recognition of foreign proceeding can provide relief like moratorium on
Relief
creditor actions, control over assets, etc.

8. Judicial Developments in India

Though comprehensive legislation is missing, Indian courts have dealt with cross-border
insolvency matters pragmatically:
Case Principle Established
Macquarie Bank Limited v. Shilpi Supreme Court upheld foreign creditors' rights to initiate
Cable Technologies Ltd. (2017) 2 insolvency proceedings under IBC.
Case Principle Established
SCC 674
NCLAT applied a "cross-border protocol" between India
Jet Airways (India) Ltd. (2019) -
and Dutch bankruptcy courts; coordinated insolvency
NCLT/NCLAT Mumbai
proceedings in both jurisdictions.
🔹 Significance of Jet Airways Case:
 India's first practical cross-border cooperation.
 NCLAT allowed parallel insolvency proceedings (India and Netherlands).
 Inspired drafting of future cross-border regulations.

9. Challenges in Cross-Border Insolvency in India

🔹 No bilateral treaties for enforcement under Section 234.
🔹 No direct recognition of foreign proceedings yet.
🔹 Sovereignty concerns over foreign courts' interference.
🔹 Complexities in handling conflicting laws and interests.
🔹 Risk of "forum shopping" and asset flight.