Regula'on of Corporate Insolvency Resolu'on Process (CIRP) in India

A Cri'cal Analysis
Makam Ganesh Kumar

Abstract:
The Insolvency and Bankruptcy Code, 2016 (IBC) introduced a paradigm shi@ in India's corporate insolvency
landscape by establishing a comprehensive framework for the resoluEon of distressed companies. This
research paper criEcally analyses the regulaEon of the Corporate Insolvency ResoluEon Process (CIRP) under
the IBC, delving into its key provisions, procedural intricacies, and the effecEveness of its implementaEon. The
paper aims to shed light on the strengths, weaknesses, and potenEal areas of improvement in the regulatory
framework governing CIRP in India.

Keywords: CIRP, IBC, NCLT, Resolu0on Plan Approval, Opera0onal Creditors, Asset Valua0on, Resolu0on
Professionals, Stakeholder Impact, Timeliness, Hierarchy of Payments, Equitable Distribu0on, Jurisprudence.

1. Introduc'on
The landscape of insolvency and bankruptcy in India underwent a transforma0ve shiK with the enactment
of the Insolvency and Bankruptcy Code, 2016 (IBC). At the heart of this legisla0ve framework lies the
Corporate Insolvency Resolu0on Process (CIRP), a mechanism designed to facilitate the revival of financially
distressed companies and Limited Liability Partnerships (LLPs). The introduc0on of CIRP marked a departure
from conven0onal insolvency prac0ces, emphasizing a 0me-bound and creditor-driven resolu0on approach.
The significance of CIRP cannot be overstated, considering its pivotal role in redefining the dynamics between
debtors, creditors, and regulatory authori0es. As a cri0cal element within the IBC, the CIRP process aims to
strike a delicate balance between the interests of various stakeholders, ensuring a fair and efficient resolu0on
of insolvency.
This academic explora0on undertakes a rigorous analysis of the regula0on of CIRP in India. By delving into
the historical evolu0on, legal intricacies, and opera0onal dynamics of the CIRP, this study seeks to unravel
the complexi0es and assess the efficacy of the regulatory framework. As we navigate through the various
stages of CIRP, from ini0a0on to the approval of resolu0on plans, a cri0cal lens will be applied to scru0nize
the strengths, weaknesses, and inherent challenges within the exis0ng system.
Through this comprehensive analysis, we endeavour to shed light on the nuances of CIRP regula0on, aiming
to contribute to the ongoing discourse surrounding insolvency prac0ces in India. By examining the legal
provisions, judicial precedents, and prac0cal implica0ons of the CIRP, this study aims to provide valuable
insights into the regulatory landscape, ul0mately informing discussions on poten0al enhancements and
refinements in the realm of corporate insolvency resolu0on.

Electronic copy available at: https://ssrn.com/abstract=4706605

2. Background of CIRP in India
The genesis of the Corporate Insolvency Resolu0on Process (CIRP) in India can be traced back to the
enactment of the Insolvency and Bankruptcy Code, 2016 (IBC). Prior to the implementa0on of the Insolvency
and Bankruptcy Code (IBC), the legal structure for dealing with insolvency and restructuring was scaYered
across various legisla0ons, including the Companies Act 20131, the Sick Industrial Companies (Special
Provisions) Act, 19852, the SARFAES Act, 20023, and the RDDBFI Act, 19934. the insolvency and bankruptcy
landscape in India was marred by inefficiencies, delays, and a lack of a comprehensive legal framework. The
absence of a structured mechanism oKen led to protracted legal baYles, leaving both creditors and debtors
in a state of financial limbo5. It took 4.3 years on average for the insolvency process to completely resolve in
India. This number was very high compared to other developed countries of the world6.
The IBC, conceptualized as a holis0c solu0on to address these shortcomings, introduced the CIRP as a
cornerstone of its insolvency resolu0on framework. Enacted with the primary objec0ve of promo0ng a 0mely
and efficient resolu0on of corporate insolvency, the IBC aimed to strike a balance between the interests of
creditors, debtors, and other stakeholders7. The Bankruptcy Legisla0ve Reforms CommiYee was cons0tuted
by the Ministry of Finance on August 22, 2014. The group, headed by T. K. Viswanathan, produced a novel
bankruptcy legisla0on. The CommiYee presented its report and preliminary legisla0on on 4 November 2015.
Following public feedback, Finance Minister Arun Jaitley presented the Insolvency and Bankruptcy Code,
2015, in the Sixteenth Lok Sabha. Bill was introduced on December 23, 2015. The Joint Parliamentary
CommiYee on the Insolvency and Bankruptcy Code, 2015 (JPC) reviewed the bill. The JPC presented a fresh
Bill draK on 28 April 2016. The bill was approved by the Lok Sabha on May 5, 2016, and by the Rajya Sabha
on May 11, 2016. President Pranab Mukherjee granted his consent, and The GazeYe of India officially
published it on 28 May 2016.
The CIRP represents a departure from tradi0onal insolvency processes by adop0ng a creditor-centric and
0me-bound approach. It provides a legal framework for the 0mely iden0fica0on of financial distress,
ini0a0on of insolvency proceedings, and formula0on of resolu0on plans to revive financially distressed

1 Companies Act 2013

2 The Sick Industrial Companies (Special Provisions) Act, 1985
3 the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
4 Recovery Of Debts And Bankruptcy Act, 1993
5 Gupta, Sachin. “The Journey of Insolvency & Bankruptcy Code,” September 5, 2018.
https://www.mondaq.com/advicecentre/content/3750/The-Journey-of-Insolvency-Bankruptcy-Code.
6 Pti. “IBC Reduces Resolution Time to 340 Days from 4.3 Years Earlier Eco Survey.” The Week, September 19, 2019.

https://www.theweek.in/wire-updates/business/2020/01/31/del154-biz-survey-insolvency.html.
7 Mittal, Cs Utkarsh. “IBC, 2016 – Objective, Insolvency Resolution Process, Challenges & Way Forward.” TaxGuru,

February 17, 2023. https://taxguru.in/corporate-law/ibc-2016-objective-insolvency-resolution-process-challenges-way-

forward.html#:~:text=The%20primary%20objective%20of%20the,bankruptcy%20in%20a%20transparent%20manner.

Electronic copy available at: https://ssrn.com/abstract=4706605

corporate en00es. The underlying philosophy is to maximize the value of assets and ensure the con0nuity of
businesses, thereby fostering a conducive environment for economic growth8.

3. Legal Framework of CIRP

The legal framework governing the Corporate Insolvency Resolu0on Process (CIRP) in India is entrenched in
the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC). The IBC, enacted to consolidate and
streamline the insolvency laws, brings under its ambit a comprehensive mechanism for the resolu0on of
corporate insolvency, with the CIRP being a pivotal component..
The CIRP is outlined in Part II of the IBC, specifically under Sec0ons 6 to 32A, and lays down the procedural
and substan0ve aspects of resolving corporate insolvency. It delineates the ini0a0on, moratorium, public
announcement, cons0tu0on of a CommiYee of Creditors (CoC), appointment of an interim resolu0on
professional, and the formula0on and approval of resolu0on plans.
• Key Provisions Governing CIRP:
- Ini'a'on (Sec'ons 6-10): Describes how the CIRP is triggered, allowing financial creditors, opera0onal
creditors, or the corporate debtor itself to ini0ate the process under defined circumstances.
- Moratorium (Sec'ons 13-14): Imposes a moratorium on certain ac0ons upon the ini0a0on of CIRP to
facilitate the resolu0on process without external interference.
- CommiOee of Creditors (Sec'on 21): Cons0tutes a CoC comprising financial creditors, which plays a
pivotal role in decision-making during the CIRP.
- Resolu'on Professional (Sec'ons 16-25): Deals with the appointment, powers, and responsibili0es of
the resolu0on professional who oversees the day-to-day affairs during the CIRP.
- Resolu'on Plan (Sec'ons 25-31A): Outlines the prepara0on, submission, and approval of resolu0on
plans by poten0al resolu0on applicants.
• Regulatory Oversight (Sec'on 60):
- The Insolvency and Bankruptcy Board of India (IBBI) is entrusted with the responsibility of regula0ng
insolvency professionals, insolvency professional agencies, and informa0on u0li0es, ensuring a
transparent and accountable insolvency resolu0on process.

4. Ini'a'on of CIRP
Ini0a0ng the Corporate Insolvency Resolu0on Process (CIRP) is a pivotal phase in the insolvency resolu0on
framework. A compara0ve analysis of the ini0a0on process allows us to examine how different stakeholders,
including financial creditors, opera0onal creditors, and the corporate debtor, play dis0nct roles in various

8Kasiva, King Stubb & “Corporate Insolvency Resolution Process (CIRP): Key Provisions and Procedures.” King Stubb & Kasiva,
March 17, 2023. https://ksandk.com/insolvency/corporate-insolvency-resolution-process/.

Electronic copy available at: https://ssrn.com/abstract=4706605

jurisdic0ons. This sec0on cri0cally assesses the ini0a0on mechanisms in India, drawing comparisons with
selected interna0onal insolvency frameworks.
The IBC provides a comprehensive framework for ini0a0ng CIRP, primarily under Sec0ons 6 to 10. Notably, a
financial creditor, opera0onal creditor, or the corporate debtor can trigger the process based on specified
condi0ons. The financial creditor files an applica0on with the Na0onal Company Law Tribunal (NCLT) when a
default occurs, while an opera0onal creditor issues a demand no0ce before approaching the NCLT. The
corporate debtor can also voluntarily ini0ate CIRP under Sec0on 10. The process is known for its creditor-
driven approach, with checks and balances to prevent frivolous applica0ons.
Compara've Analysis:
• United States (Chapter 11): Chapter 11 of the United States Bankruptcy Code allows the debtor, oKen a
corpora0on, to file for bankruptcy and propose a reorganiza0on plan. It provides a debtor-in-possession
model, enabling the corporate debtor to con0nue opera0ons under the exis0ng management during the
bankruptcy proceedings. Unlike the IBC, which involves an external resolu0on professional, Chapter 11
emphasizes debtor-led restructuring. This approach aims to preserve the value of the business and
enhance the likelihood of creditors receiving a beYer return9.
• United Kingdom (Administra'on): The United Kingdom employs an administra0on procedure under the
Insolvency Act 1986. It allows a troubled company, its directors, or qualifying floa0ng charge holders to
appoint an administrator. The objec0ve is to rescue the company as a going concern or achieve a beYer
result for creditors than immediate liquida0on. The administra0on process in the UK is characterized by
a court-driven approach, where the court grants an administra0on order, and an appointed administrator
takes control of the company. This stands in contrast to India's NCLT-centric ini0a0on10.
• Singapore (Scheme of Arrangement): Singapore's Companies Act provides for a Scheme of Arrangement
as a tool for debt restructuring. A company, its creditors, or shareholders can propose a scheme to
reorganize its capital, opera0ons, or debts. The scheme requires approval from a majority in number
represen0ng 75% in value of each class of creditors or shareholders. The court's sanc0on is then sought,
and if granted, the scheme becomes binding on all stakeholders11.
The compara0ve analysis sheds light on the diversity in approaches to ini0a0ng CIRP globally. While India
follows a more formalized and adjudica0on-centric process, the U.S. emphasizes debtor-in-possession, the
U.K. focuses on administra0on, and Singapore employs a flexible scheme of arrangement. Evalua0ng the
strengths and weaknesses of these ini0a0on mechanisms provides valuable insights for refining the CIRP
framework in India and fostering interna0onal best prac0ces.

9 United States Courts. “Chapter 11 - Bankruptcy Basics,” n.d. https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-

basics/chapter-11-bankruptcy-basics#:~:text=Background,court%20approval%2C%20borrow%20new%20money.
10 Participation, Expert. “Insolvency Act 1986,” n.d. https://www.legislation.gov.uk/ukpga/1986/45/contents.
11 Ben. “Declaring Bankruptcy in Singapore - What Happens.” PKWA Law LLC, September 19, 2022. https://pkwalaw.com/declaring-

bankruptcy-singapore/.

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5. Moratorium: Balancing Interests
A moratorium is a delay or suspension of an ac0vity or a law. In a legal context, it may refer to the temporary
suspension of a law to allow a legal challenge to be carried out12.The imposi0on of a moratorium during the
Corporate Insolvency Resolu0on Process (CIRP) is a crucial element in preserving the distressed company's
financial posi0on and facilita0ng effec0ve resolu0on. The moratorium serves as a shield, protec0ng the
corporate debtor from various ac0ons that could hinder the resolu0on process. However, achieving a delicate
balance between the interests of the corporate debtor and its creditors is paramount. This sec0on explores
the concept of moratorium in the context of CIRP in India and delves into the challenge of striking a fair
equilibrium.
In the Indian context, the moratorium, as defined in Sec0on 14 of the Insolvency and Bankruptcy Code (IBC),
is a statutory freeze on certain ac0ons and proceedings against the corporate debtor. This freeze begins from
the insolvency commencement date and extends un0l the approval or rejec0on of the resolu0on plan by the
Na0onal Company Law Tribunal (NCLT). The objec0ve is to provide a breathing space for the resolu0on
professional and the CommiYee of Creditors (COC) to formulate and approve a resolu0on plan without
external disrup0ons.
• Balancing Corporate Debtor's Interests:
- Legal Proceedings: The moratorium bars the ini0a0on or con0nua0on of legal proceedings against
the corporate debtor. This shield is crucial for preven0ng creditors from pursuing individual ac0ons
that could fragment the insolvency process. However, it is essen0al to strike a balance by allowing
legi0mate disputes to be addressed, especially those cri0cal to the corporate debtor's business
con0nuity.
- Asset Transfer Restric'ons: The moratorium restricts the corporate debtor from transferring or
disposing of its assets. While this prevents asset-stripping and ensures the integrity of the resolu0on
process, it should be carefully balanced to avoid hindering rou0ne business opera0ons or necessary
transac0ons that contribute to the company's value.
- Recovery Ac'ons: The freeze on recovery ac0ons, including foreclosure and enforcement of security
interests, prevents creditors from taking unilateral ac0ons that may prejudice the overall resolu0on.
Nonetheless, a delicate balance is required to safeguard the rights of secured creditors and prevent
a complete erosion of their interests.
• Interna'onal Perspec'ves:
- United States (Automa'c Stay): Chapter 11 of the U.S. Bankruptcy Code incorporates an "automa0c
stay" that halts most creditor ac0ons upon the ini0a0on of bankruptcy proceedings. Similar to the

12 Merriam-Webster Dictionary. “Moratorium,” January 22, 2024. https://www.merriam-webster.com/dictionary/moratorium

Electronic copy available at: https://ssrn.com/abstract=4706605

 IBC's moratorium, the automa0c stay is designed to provide a breathing spell for the debtor, but
excep0ons exist to protect secured creditors' interests.
- United Kingdom (Moratorium under the New Insolvency Regime): The UK's new moratorium regime
allows financially distressed companies to obtain a moratorium, temporarily shielding them from
creditor ac0ons. The moratorium aims to facilitate restructuring efforts, emphasizing the importance
of striking a balance between debtor protec0on and creditor rights.
• Challenges and Considera'ons:
- Timely Resolu'on: A protracted moratorium may impede the 0mely resolu0on of the corporate
debtor's financial distress, affec0ng the interests of both creditors and the distressed en0ty.
- Opera'onal Con'nuity: Striking the right balance requires ensuring that the moratorium does not
unduly disrupt the normal course of business opera0ons, hindering the corporate debtor's ability to
generate value during the resolu0on process.
The moratorium is a double-edged sword13, providing essen0al protec0on for the corporate debtor while
posing challenges in maintaining a fair equilibrium. Striking the right balance requires constant judicial
scru0ny and legisla0ve refinement to ensure that the interests of both the corporate debtor and its creditors
are adequately safeguarded. A nuanced approach that considers the unique circumstances of each case is
vital for fostering a robust insolvency resolu0on framework.

6. Role of CommiOee of Creditors (CoC)

In the landscape of Corporate Insolvency Resolu0on Process (CIRP) in India, the CommiYee of Creditors (CoC)
emerges as a pivotal en0ty entrusted with crucial responsibili0es and decision-making powers. Comprising
financial creditors, the CoC plays a central role in determining the fate of a distressed corporate debtor. This
sec0on explores the mul0faceted responsibili0es and func0ons carried out by the CoC within the CIRP
framework14.
• Cons'tu'on and Composi'on:
- All-Inclusive Representa'on: The CoC consists of all financial creditors of the corporate debtor,
bringing together diverse stakeholders with varying degrees of exposure to the debtor. This inclusive
composi0on aims to ensure comprehensive representa0on of creditors' interests.
- Vo'ng Share Determina'on: The vo0ng share of each financial creditor in the CoC is determined
based on the financial debts owed to them. This democra0c approach ensures that creditors with
higher exposure have a more significant say in the decision-making process.

13 Perlman, Ellie. “Why the Eviction Moratorium Is a Double-Edged Sword for Multifamily,” September 13, 2021.
https://www.linkedin.com/pulse/why-eviction-moratorium-double-edged-sword-ellie-perlman/.
14 Especia Associates LLP. “Committee of Creditors- Roles, Responsibilities & Functions,” September 10, 2022.

https://especia.co.in/post/committee-of-
creditors/#:~:text=This%20committee%20decides%20whether%20a,plan%20if%20the%20need%20arises.

Electronic copy available at: https://ssrn.com/abstract=4706605

• Key Responsibili'es:
- Appointment of Resolu'on Professional: One of the primary responsibili0es of the CoC is to appoint
a resolu0on professional (RP) to manage the affairs of the corporate debtor during the CIRP. The RP
acts as a key intermediary between the CoC and the distressed en0ty.
- Considera'on of Resolu'on Plans: The CoC evaluates and deliberates on the resolu0on plans
submiYed by prospec0ve resolu0on applicants. The approval of a resolu0on plan requires a vo0ng
share of not less than 66% of the financial creditors, emphasizing the CoC's pivotal role in determining
the future course for the corporate debtor.
- Financial Decision-Making: Decisions related to the approval of the resolu0on plan, including the
manner of distribu0on of proceeds among creditors, are subject to the delibera0ons and consensus
within the CoC. This financial decision-making power underscores the CoC's authority in shaping the
outcome of the insolvency resolu0on process.
- Replacement or Confirma'on of Resolu'on Professional: The CoC holds the authority to either
replace the interim resolu0on professional (appointed at the ini0a0on of CIRP) with a new RP or
confirm the con0nua0on of the interim RP, thereby influencing the managerial dynamics during the
resolu0on process.
• Challenges and Considera'ons:
- Divergent Interests: The CoC faces the challenge of managing conflic0ng interests among its
members, considering that each financial creditor aims to maximize its recovery. Balancing divergent
interests becomes crucial to arriving at consensual decisions.
- Timely Decision-Making: The effec0veness of the CIRP hinges on the CoC's ability to make 0mely
decisions. Delays or indecisiveness within the CoC can impede the resolu0on process, affec0ng both
the corporate debtor and creditors.
• Compara've Analysis:
- Global Prac'ces: Interna0onally, the role of creditors' commiYees varies. In the United States, for
instance, the commiYee of unsecured creditors plays a vital role in Chapter 11 bankruptcy cases,
emphasizing the diverse approaches to creditor involvement.
- Evolu'on of CoC in Indian Insolvency Landscape: The evolu0on of the CoC in India signifies a
departure from tradi0onal debtor-in-possession models, placing greater reliance on the collec0ve
decision-making power of financial creditors.
The CommiYee of Creditors stands at the forefront of the CIRP, wielding considerable influence in shaping
the des0ny of a distressed corporate debtor. Naviga0ng through complex financial considera0ons and
divergent interests, the CoC's effec0veness is pivotal in realizing the overarching objec0ves of the insolvency
resolu0on process – balancing creditor rights, reviving businesses, and fostering a robust economic
ecosystem.

Electronic copy available at: https://ssrn.com/abstract=4706605

7. Appointment and Func'oning of Resolu'on Professionals
Within the framework of Corporate Insolvency Resolu0on Process (CIRP) in India, the appointment and
func0oning of Resolu0on Professionals (RPs) serve as linchpins determining the efficacy of the insolvency
resolu0on mechanism. This sec0on explores the nuanced process of appoin0ng RPs and delineates their
crucial func0ons during the CIRP lifecycle.
• Appointment Process:
- Interim Resolu'on Professional (IRP): At the ini0a0on of the CIRP, the Na0onal Company Law
Tribunal (NCLT) appoints an Interim Resolu0on Professional (IRP) within a s0pulated period. The IRP
assumes immediate control of the distressed corporate debtor's affairs.
- Transi'on to Resolu'on Professional: The Interim Resolu0on Professional, post-appointment,
communicates with the CommiYee of Creditors (CoC) during their first mee0ng. The CoC decides
either to con0nue with the IRP or appoint a new RP. The decision is based on the majority vote of not
less than 66% of the vo0ng share of the financial creditors.
- Confirma'on by Insolvency and Bankruptcy Board of India (IBBI): If the CoC opts for a new RP, the
proposed professional's name is forwarded to the Insolvency and Bankruptcy Board of India (IBBI) for
confirma0on. Once confirmed, the NCLT appoints the confirmed RP to oversee the remaining CIRP
proceedings.
• Crucial Func'ons of Resolu'on Professionals:
- Management of Corporate Debtor’s Affairs: RPs, from the date of their appointment, assume control
over the management and opera0ons of the corporate debtor. This involves not only decision-making
authority but also the responsibility of steering the company towards resolu0on.
- Supervision of Moratorium: RPs play a pivotal role in enforcing the moratorium declared by NCLT
post-CIRP ini0a0on. This involves preven0ng legal ac0ons against the corporate debtor and managing
its assets without any encumbrances.
- Verifica'on of Claims: Upon the admission of the CIRP applica0on, RPs summon, verify, and list the
claims made by creditors. This me0culous process ensures that all legi0mate claims are considered
during the resolu0on planning stage.
- Conduc'ng Creditor Mee'ngs: RPs facilitate and conduct mee0ngs of the CoC, presen0ng essen0al
informa0on and updates. These mee0ngs are cri0cal for decision-making, approval of resolu0on
plans, and addressing queries from the creditors.
- Informa'on Memorandum Prepara'on: RPs prepare a comprehensive Informa0on Memorandum
containing relevant details about the corporate debtor. This memorandum forms the basis for
resolu0on plans submiYed by prospec0ve resolu0on applicants.

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 - Examina'on of Resolu'on Plans: RPs me0culously examine each resolu0on plan to ensure
compliance with regulatory requirements. This involves assessing the plan's feasibility, its ability to
address the concerns of creditors, and adherence to legal provisions.
- Implementa'on Oversight: Once a resolu0on plan is approved, RPs oversee its implementa0on,
ensuring that the approved terms are executed. This involves coordina0on with various stakeholders
to achieve the objec0ves outlined in the resolu0on plan.
• Challenges and Regulatory Considera'ons:
- Conflict Resolu'on: RPs oKen navigate through conflic0ng interests among creditors and challenges
in reaching consensus during the decision-making process.
- Adherence to Code of Conduct: RPs must adhere to the IBBI's Code of Conduct, ensuring ethical and
transparent conduct throughout the CIRP.
The appointment and func0oning of Resolu0on Professionals play a pivotal role in the successful execu0on
of Corporate Insolvency Resolu0on Process. Their proac0ve management, adherence to regulatory norms,
and effec0ve communica0on with stakeholders are instrumental in achieving the overarching goals of CIRP
– reviving distressed en00es, protec0ng creditor interests, and fostering a robust economic environment15.

8. Informa'on Memorandum and Resolu'on Plans

In the Corporate Insolvency Resolu0on Process (CIRP) of a distressed en0ty in India, the crea0on of an
Informa0on Memorandum (IM) and the subsequent formula0on and approval of Resolu0on Plans cons0tute
key milestones. This sec0on delves into the significance of the Informa0on Memorandum and the intricate
process of craKing and valida0ng Resolu0on Plans within the regulatory framework.
• Informa'on Memorandum (IM):
- Purpose and Scope: The IM serves as a comprehensive document prepared by the Resolu0on
Professional (RP) under the guidelines set by the Insolvency and Bankruptcy Board of India (IBBI). It
contains essen0al informa0on about the corporate debtor, aiding poten0al resolu0on applicants in
formula0ng their plans.
- Contents of IM: The IM typically includes details about the corporate debtor's financials, opera0onal
aspects, assets, liabili0es, con0ngent liabili0es, ongoing li0ga0on, and any other informa0on crucial
for prospec0ve resolu0on applicants to make informed decisions.
- Basis for Resolu'on Plans: The IM forms the founda0on upon which resolu0on applicants develop
their plans for reviving the distressed en0ty. The accuracy and completeness of the informa0on
provided in the IM are pivotal in ensuring the viability of the subsequent resolu0on plans.

“Appointment, Role and Powers of IRP/RP,” n.d. http://student.manupatra.com/Academic/ReadyReckoner/Insolvency-&-

15

Bankruptcy/Appointment-Role-and-Powers-of-IRP-
RP.htm#:~:text=It%20is%20the%20responsibility%20of,c)%20collect%2C%20collate%20and%20finally.

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• Resolu'on Plans:
- Submission by Resolu'on Applicants: Resolu0on Plans are formulated by prospec0ve resolu0on
applicants who express interest in reviving the corporate debtor. These plans are submiYed to the RP
within the 0meframe specified by the regulatory authori0es.
- Examina'on by the Resolu'on Professional: The RP me0culously examines each resolu0on plan to
ensure its compliance with the s0pulated regulatory requirements. This includes assessing the
financial feasibility, protec0on of creditor interests, and conformity with legal provisions.
- Approval by CommiOee of Creditors (CoC): The resolu0on plan, once scru0nized by the RP, is
presented to the CoC for approval. The CoC, comprising financial creditors, holds a crucial role in
determining the fate of the resolu0on plan.
- Criteria for Approval: The CoC evaluates the resolu0on plan on various parameters, including the
ability to meet insolvency resolu0on process costs, payment of opera0onal debts, effec0ve
management of the corporate debtor post-approval, and adherence to legal requirements.
- Vo'ng by CoC: The approval requires a vote of not less than 66% of the vo0ng share of the financial
creditors. This emphasizes the significance of consensus among major financial stakeholders in the
revival process.
- NCLT Approval: Once the CoC approves the resolu0on plan, it is submiYed to the Na0onal Company
Law Tribunal (NCLT) for final approval. The NCLT ensures that the plan aligns with the objec0ves of
the Insolvency and Bankruptcy Code.
Challenges and Considera'ons:
- Balancing Interests: Resolu0on Plans oKen need to strike a delicate balance between the interests of
various stakeholders, including financial creditors, opera0onal creditors, and the corporate debtor
itself.
- Feasibility and Implementa'on: Ensuring the prac0cality and successful implementa0on of the
proposed resolu0on plan is a cri0cal challenge that demands a thorough assessment by the RP and
the CoC.
The Informa0on Memorandum and Resolu0on Plans are integral components of the CIRP framework, ac0ng
as catalysts for the revival of distressed en00es. The transparency and accuracy in presen0ng informa0on,
coupled with the diligence in scru0nizing and approving resolu0on plans, contribute to the effec0veness of
the insolvency resolu0on process, fostering a dynamic and resilient corporate landscape in India16.

9. Timeliness of CIRP

16
Laws, Ibc. “The Information Memorandum under the Insolvency and Bankruptcy Code, 2016 (IBC) – Rishabh
Govila.” IBC Laws, July 8, 2023. https://ibclaw.in/the-information-memorandum-under-the-insolvency-and-bankruptcy-
code-2016-ibc-rishabh-govila/.

Electronic copy available at: https://ssrn.com/abstract=4706605

The 0meliness of the Corporate Insolvency Resolu0on Process (CIRP) is a cri0cal aspect that significantly
influences the outcomes for various stakeholders involved. This sec0on explores the profound impact that
the 0mely execu0on of CIRP can have on the interests of creditors, corporate debtors, and the overall efficacy
of the insolvency resolu0on mechanism17.
• Timelines Defined by Insolvency and Bankruptcy Code (IBC):
- Mandated Timeframes: The IBC establishes specific 0meframes to ensure the expedi0ous resolu0on
of insolvency cases. The ini0al 0meline for comple0ng the CIRP is 180 days, with a provision for an
extension of up to 90 days under certain circumstances.
- Ra'onale for Timelines: Timely resolu0on is crucial to prevent value erosion of the distressed en0ty,
minimize uncertainty in the business environment, and provide a clear path for the revival or
liquida0on of the corporate debtor.
• Impact on Creditors:
- Financial Recovery: Timely comple0on of CIRP enhances the prospects of financial creditors
recovering their dues efficiently. Delays can lead to further deteriora0on of the corporate debtor's
financial posi0on, affec0ng the ul0mate recovery amount.
- Reduced Uncertainty: Creditors, both financial and opera0onal, benefit from a swiK resolu0on
process as it reduces the period of uncertainty. Quick decisions enable creditors to plan their financial
strategies more effec0vely.
• Impact on Corporate Debtors:
- Business Con'nuity: Timely resolu0on allows for the swiK implementa0on of a resolu0on plan,
facilita0ng the con0nuity of business opera0ons. This is especially crucial for corporate debtors
aiming for revival and opera0onal sustainability.
- Minimized Value Erosion: A well-executed CIRP within the s0pulated 0meframe helps in minimizing
the erosion of the corporate debtor's value. This is essen0al for preserving the interests of all
stakeholders, including shareholders and employees.
• Impact on the Overall Efficacy of CIRP:
- Credibility of the Process: Adherence to 0melines enhances the credibility of the insolvency
resolu0on process. It ins0ls confidence in stakeholders, encouraging their ac0ve par0cipa0on and
coopera0on in the process.
- Market Dynamics and Economic Stability: Timely resolu0on contributes to maintaining stable market
dynamics by swiKly addressing financial distress. It prevents the ripple effects of a prolonged
insolvency process on the broader economy.
• Challenges and Considera'ons:

17
Sehgal, Diganth Raj. “Mandatory Timeline of the CIRP in Practice - Fact or Fiction - iPleaders.” iPleaders, February 16,
2021. https://blog.ipleaders.in/mandatory-timeline-cirp-practice-fact-fiction/.

Electronic copy available at: https://ssrn.com/abstract=4706605

 - Complexity of Cases: Some cases may involve intricate financial structures or legal complexi0es,
posing challenges to adhering strictly to the mandated 0melines. Striking a balance between speed
and thoroughness becomes crucial.
- Extensions and Judicial Processes: While the IBC allows for extensions in certain situa0ons, the
balance between expedi0ous resolu0on and the need for thorough examina0on some0mes leads to
judicial interven0ons, impac0ng the overall 0meline.
The 0meliness of the CIRP in India is integral to its effec0veness in achieving the objec0ves set by the
Insolvency and Bankruptcy Code. Striking the right balance between speed and due diligence is impera0ve
to ensure that the interests of creditors, corporate debtors, and the economy at large are safeguarded. Timely
resolu0ons not only preserve value but also contribute to the overall resilience and credibility of the
insolvency framework.

10. Conclusion:
The Corporate Insolvency Resolu0on Process (CIRP) in India, governed by the Insolvency and Bankruptcy
Code, has undergone substan0al developments since its incep0on. This comprehensive analysis has explored
the mul0faceted dimensions of CIRP, encompassing its legal framework, ini0a0on, moratorium, role of the
CommiYee of Creditors (CoC), appointment and func0oning of resolu0on professionals, informa0on
memorandum, resolu0on plans, 0meliness, and the impact of judicial decisions.
• Reflec'ng on the Cri'cal Analysis:
- Evolu'on of Legal Framework: The evolu0on of the legal framework surrounding CIRP signifies a
proac0ve approach to address the complexi0es of insolvency. However, con0nuous amendments and
judicial interpreta0ons highlight the need for a nuanced and adaptable legisla0ve landscape.
- Challenges and Opportuni'es: The cri0cal analysis has shed light on the challenges and opportuni0es
inherent in the CIRP. Balancing the interests of diverse stakeholders, ensuring 0mely resolu0on, and
addressing the intricacies of financial structures remain ongoing challenges that demand con0nuous
aYen0on.
- Stakeholder Confidence: The clarity provided by judicial decisions, especially landmark cases, has
played a pivotal role in ins0lling confidence among stakeholders. The jurispruden0al framework
established through these decisions acts as a guiding force for the effec0ve func0oning of CIRP.
• Looking Ahead:
- Con'nuous Legisla've Review: A dynamic and responsive legisla0ve approach is essen0al for
addressing emerging challenges. Regular reviews and updates to the legal framework can enhance
the efficiency and effec0veness of the insolvency resolu0on process.

Electronic copy available at: https://ssrn.com/abstract=4706605

 - Stakeholder Collabora'on: The success of CIRP hinges on collabora0ve efforts from all stakeholders.
Striking a balance between the rights and interests of creditors, including opera0onal creditors and
homebuyers, remains crucial for the sustainable func0oning of the insolvency regime.
- Judicial Prudence: The evolving nature of insolvency law necessitates a judicious and forward-looking
approach from the judiciary. Adjudica0ng cases with a nuanced understanding of the commercial
reali0es and complexi0es involved is paramount.
In conclusion, the cri0cal analysis underscores that while the CIRP has made significant strides in revitalizing
distressed en00es, there exist areas warran0ng further aYen0on and refinement. Nurturing a robust and
adap0ve insolvency ecosystem requires a collec0ve commitment from legislators, regulators, prac00oners,
and the judiciary. As the landscape con0nues to evolve, the journey of the Corporate Insolvency Resolu0on
Process remains a dynamic and evolving narra0ve, shaped by the interplay of legal principles, judicial
decisions, and the prac0cal reali0es of corporate insolvency in India.

References:
- “E-Book,” n.d. hYps://www.mca.gov.in/content/mca/global/en/acts-rules/ebooks.html.
- Insolvency and Bankruptcy Code of India by Ashish Makhija
- The Law of Insolvency in India by Mulla
- Yearbook of Insolvency and Bankruptcy Cases by Mamata Biswal
- Key to Insolvency and Bankruptcy Prac0ce and Procedures by Narender Kumar

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