CIRP Step-by-Step Guide: Corporate Insolvency Resolution Process Under IBC 2016

The Corporate Insolvency Resolution Process (CIRP) is the structured procedure under the Insolvency and Bankruptcy Code 2016 for resolving corporate insolvency. This step-by-step guide walks through each stage from filing the application to resolution or liquidation.

Step 1: Filing the Application

• Financial Creditor (Section 7): File Form 1 before NCLT with proof of default (bank statement, CIBIL records, financial contract). No prior notice to corporate debtor required.
• Operational Creditor (Section 9): First send 10-day demand notice (Form 3) to corporate debtor. If default not cured, file Form 5 before NCLT.
• Corporate Debtor (Section 10): File Form 6 with board resolution authorizing filing.

Step 2: NCLT Admission — 14 Days

NCLT must admit/reject the application within 14 days of filing. If incomplete: 7 days to cure defects. On admission, NCLT appoints an Interim Resolution Professional (IRP) and declares moratorium.

Step 3: Public Announcement — Day 1-3

IRP issues a public announcement within 3 days of appointment inviting claims from all creditors. Published in newspapers + IBBI website. Creditors must submit claims within 14 days of announcement.

Step 4: Constitution of CoC — Day 30

IRP collates and verifies all claims, then constitutes the Committee of Creditors. CoC first meeting held within 7 days of constitution. CoC may replace IRP with a new Resolution Professional by 66% vote.

Step 5: Information Memorandum

RP prepares an Information Memorandum — a comprehensive document about the corporate debtor's business, assets, liabilities, and operations. Potential resolution applicants use this for due diligence.

Step 6: Resolution Plan Invitation

RP issues Request for Resolution Plans (RFRP) to potential resolution applicants (eligible under Section 29A). Resolution applicants submit plans including: treatment of all creditors, management restructuring, capital infusion, operational changes.

Step 7: CoC Approval of Resolution Plan

CoC evaluates plans and approves one by 66% voting share. Approved plan sent to NCLT for final approval. NCLT approval makes the plan binding on all stakeholders including dissenting creditors.

Step 8: NCLT Order

NCLT approves the resolution plan, which becomes binding. New management takes over. All previous debts (except CIRP costs) are settled per the plan. Section 32A grants immunity from prosecution for the new acquirer for prior offences.

If No Resolution Plan — Liquidation

If no plan is approved within 180/270 days, NCLT orders liquidation. Liquidator takes over, assets are sold, and proceeds distributed as per the waterfall order.

NCLT Powers During CIRP

• Stay all proceedings against corporate debtor
• Approve/reject resolution plans
• Adjudicate avoidance transactions (Section 43-51)
• Order liquidation
• Approve fees of IRP/RP