The Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 can be triggered by a financial creditor (Section 7), an operational creditor (Section 9), or the company itself (Section 10), and once admitted by the National Company Law Tribunal, a moratorium freezes recovery actions while a resolution professional and the Committee of Creditors attempt to revive the company within a time-bound period. The Insolvency and Bankruptcy Code (Amendment) Bill, 2025, which passed both houses of Parliament in early 2026, introduces a new creditor-led, largely out-of-court resolution route and tightens liquidation timelines to address the significant delays the original process had developed in practice. This platform recommends confirming the current status of Presidential assent and notification before assuming every provision of the 2025 Amendment is already in force.
How CIRP is triggered, and what the moratorium does
The Corporate Insolvency Resolution Process can be initiated in three ways: a financial creditor --
typically a bank, NBFC, or bondholder -- can apply under Section 7 upon proof of default, without first
needing to send a demand notice; an operational creditor -- typically a vendor or supplier owed money for
goods or services -- can apply under Section 9, but only after serving a statutory demand notice and
waiting a specified period, and the application can be defeated if the corporate debtor demonstrates a
genuine pre-existing dispute over the debt; and the corporate debtor itself can apply under Section 10 to
proactively initiate its own resolution process. Once the National Company Law Tribunal (NCLT) admits an
application, a moratorium under Section 14 takes effect, freezing all pending suits and recovery actions
against the company's assets and barring any transfer, encumbrance, or disposal of those assets while the
resolution process runs -- giving the company breathing room to attempt a genuine turnaround rather than
being dismembered by a race among creditors.
Timelines, the resolution professional, and the Committee of Creditors
CIRP is designed to run within a strict statutory timeline -- 180 days from admission, extendable once
by up to 90 days, for a hard outer limit of 330 days including any time spent in litigation, after which
the company generally moves into liquidation if no resolution plan has been approved. An interim
resolution professional is appointed on admission and typically confirmed or replaced as the resolution
professional once the Committee of Creditors (CoC) -- composed of the company's financial creditors,
voting in proportion to the debt they are owed -- holds its first meeting; the resolution professional
prepares an information memorandum, invites resolution plans from prospective buyers or investors, and
places viable plans before the CoC, which must approve a plan by a vote of at least 66 percent by value
before it goes to the NCLT for final sanction. In practice, industry data cited in recent commentary shows
CIRPs that ultimately conclude with an approved resolution plan have been taking an average of around 602
days -- nearly double the 330-day statutory outer limit -- a gap the 2025 Amendment specifically targets.
The 2025 Amendment: a creditor-led out-of-court process and other reforms
The Insolvency and Bankruptcy Code (Amendment) Bill, 2025 passed the Lok Sabha and Rajya Sabha in
early 2026, and this platform recommends confirming its current status -- Presidential assent, official
notification, and which specific provisions have actually been brought into force -- before treating any
particular change as already operative. Reported key features include a new Creditor-Initiated Insolvency
Resolution Process (CIIRP), a largely out-of-court mechanism that specified financial institutions can
trigger with the agreement of creditors holding at least 51 percent of outstanding debt by value, under
which -- unlike traditional CIRP -- management of the company can remain with the existing promoters or
directors, subject to the oversight of a resolution professional, rather than immediately shifting control
away from them; a clarification that government dues do not enjoy the status of a secured creditor in the
priority order; and expanded rule-making power for the central government to address group insolvency
(coordinating insolvency proceedings across related companies in a corporate group) and cross-border
insolvency matters. This platform recommends treating the precise operational detail of these new
mechanisms as still emerging until the implementing rules are notified and tested in practice.
Common mistakes people make with CIRP:
- Assuming an operational creditor's Section 9 application will automatically succeed -- even a
genuine pre-existing dispute raised by the debtor can defeat the petition.
- Not appreciating that the moratorium freezes recovery actions against the company but does not by
itself extinguish the underlying debt -- creditors must still submit claims through the resolution
professional.
- Assuming the entire 2025 Amendment is already in force the moment it passed Parliament, without
checking Presidential assent and notification status.
Who can initiate the Corporate Insolvency Resolution Process against a company?
A financial creditor under Section 7, an operational creditor under Section 9 (after a demand notice),
or the company itself under Section 10.
What is the maximum time CIRP can take under the IBC?
A statutory outer limit of 330 days from admission, including litigation time, though industry data
cited in recent commentary shows actual average completion times have significantly exceeded this in
practice -- a gap the 2025 Amendment specifically targets.
What is the Creditor-Initiated Insolvency Resolution Process (CIIRP) introduced by the 2025 Amendment?
A reported new, largely out-of-court resolution route that specified financial institutions can trigger
with creditor agreement, under which company management can remain in place subject to oversight -- this
platform recommends confirming its current notification and operational status before relying on it.
