Sections 121 and 122 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Bankruptcy under Part III is not the first step; it follows an earlier order in the insolvency resolution process. Section 121 lists the orders after which an application for bankruptcy may be made and sets a three-month window. Section 122 says what the debtor's own application must carry. This article reads both as printed in the IBBI consolidated text of the Code amended up to 12 August 2021, and then sets out the change that the Insolvency and Bankruptcy Code (Amendment) Act, 2026 makes to section 121. For help choosing the right route, a legal consultation is a sensible start.
An application for bankruptcy may be made by a creditor (alone or jointly) or by the debtor after one of three orders: an order under section 100(4) (rejection for intent to defraud), under section 115(2) (rejection of the repayment plan) or under section 118(3) (plan not completely implemented). It must be filed within three months of the order, and where the debtor is a firm, any partner may file. The debtor's application must carry the records of the insolvency resolution process, a statement of affairs and a copy of the order permitting the application; the debtor may propose a bankruptcy trustee and may not withdraw without leave.
Section 121(1): the three orders
Section 121(1) reads: "An application for bankruptcy of a debtor may be made, by a creditor individually or jointly with other creditors or by a debtor, to the Adjudicating Authority in the following circumstances, namely":
| Clause | The earlier order | Where it comes from |
|---|---|---|
| (a) | An order passed by an Adjudicating Authority under sub-section 4 of section 100 | Rejection of the application on the resolution professional's report of intention to defraud; see our article on section 100 |
| (b) | An order passed under sub-section 2 of section 115 | Rejection of the repayment plan; see our article on sections 114 and 115 |
| (c) | An order passed under sub-section 3 of section 118 | The plan has not been completely implemented; see our article on sections 118 and 120 |
The applicant may be "a creditor individually or jointly with other creditors or by a debtor". Bankruptcy is therefore open to either side once one of the orders exists. A bankruptcy application cannot be made merely because a debt is unpaid.
Section 121(2) and (3): the window and the firm
Three months. "An application for bankruptcy shall be filed within a period of three months of the date of the order passed by the Adjudicating Authority under the sections referred to in sub-section (1)." The period runs from the date of the order. The sub-section does not provide for extension.
Firms. "Where the debtor is a firm, the application under sub-section (1) may be filed by any of its partners." This contrasts with section 94(2), where partners need to file jointly (all or a majority) to start the insolvency resolution process for the firm; see our article on section 94. Under section 121(3) it is enough that any one partner files.
What the Amendment Act, 2026 changes
Section 54 of the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026) amends section 121(1). The Amendment Act, 2026 comes into force on the date or dates the Central Government notifies; the notification is not in the texts consulted, so check whether this change has been notified.
| As printed in the consolidated text | After the 2026 Act |
|---|---|
| Clause (c) ends: "...under sub-section 3 of section 118." | In clause (c), for the word and figures "section 118.", the words and figures "section 118; or" are substituted |
| Only three circumstances, (a) to (c) | New clause (d): "where an order has been passed by an Adjudicating Authority under sub-section (1A) of section 106." |
The new clause (d) connects with new sub-section (1A) of section 106, inserted by section 53 of the same Act. Under it, where no repayment plan is submitted within the period in section 106(1), the Authority passes an order terminating the insolvency resolution process, and the debtor or the creditors "shall be entitled to file an application for bankruptcy under Chapter IV". Clause (d) of section 121(1) gives that order a place in the list of orders on which an application may rest, so the three-month window of sub-section (2) would apply to it as well. See our article on section 106. The amending clause and the printed section read together without conflict.
Section 122: the debtor's application
Documents (sub-section (1)). The application by the debtor "shall be accompanied by":
| Clause | Document |
|---|---|
| (a) | The records of the insolvency resolution process undertaken under Chapter III of Part III |
| (b) | The statement of affairs of the debtor in such form and manner as may be prescribed, on the date of the application for bankruptcy |
| (c) | A copy of the order passed by the Adjudicating Authority under Chapter III of Part III permitting the debtor to apply for bankruptcy |
Clause (b) asks for the statement of affairs "on the date of the application for bankruptcy", so a statement prepared for the earlier process will not do if it is out of date. Clause (c) ties the application back to the earlier order, which is why section 121(1) matters.
Bankruptcy trustee (sub-section (2)). "The debtor may propose an insolvency professional as the bankruptcy trustee in the application for bankruptcy." If one is proposed, the Board is asked under section 125 to confirm that no disciplinary proceedings are pending; see our article on section 125.
Form and fee (sub-section (3)). The application "shall be in such form and manner and accompanied by such fee as may be prescribed". The Insolvency and Bankruptcy Board of India (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019 is the regulation set for bankruptcy of personal guarantors; the copy consulted is amended up to 02-06-2026. No rules or regulations on other individuals or on partnership firms are in the texts consulted, so no form or fee is given here.
Withdrawal (sub-section (4)). "An application for bankruptcy by the debtor shall not be withdrawn without the leave of the Adjudicating Authority."
Example. Dinesh Rathod's repayment plan is rejected by the Adjudicating Authority under section 114. Within three months of that order, Dinesh files an application for bankruptcy. He attaches the records of the insolvency resolution process, a fresh statement of affairs as on the date of filing and a copy of the order of rejection. He proposes a named insolvency professional as bankruptcy trustee. A creditor, Sagar Distributors, could equally have applied, jointly with others or alone, within the same three months. Dinesh cannot later withdraw without the Authority's leave.
For the creditor's own application, see our article on section 123 and the overview of the bankruptcy application under sections 121 to 123.
Amendments and notifications made after 12 August 2021, other than the Amendment Act, 2026, are not in the texts consulted and should be checked.
Need help with a bankruptcy application?
The three-month window is short, and the debtor's application needs specific documents, including an up-to-date statement of affairs. A legal consultation can help you check which order you rely on, whether the window is open and what must be attached.
Key takeaways
- Bankruptcy follows one of three orders under sections 100(4), 115(2) or 118(3); the 2026 Act adds a fourth, an order under section 106(1A).
- A creditor (alone or jointly) or the debtor may apply, within three months of the order.
- Any partner may file for a firm.
- The debtor's application carries the process records, a current statement of affairs and a copy of the order.
- The debtor needs leave to withdraw.
Read next
- Section 123: bankruptcy application by a creditor
- Section 125: appointment of the bankruptcy trustee
- The bankruptcy application under sections 121 to 123
- Section 124: the interim moratorium and appointment of the bankruptcy trustee
Disclaimer: Based on the IBBI consolidated text of the Insolvency and Bankruptcy Code, 2016 amended up to 12 August 2021 and on the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026), which comes into force on the date or dates notified by the Central Government, as consulted on 2 October 2026. It explains the words of the statute only; commencement notifications, other amendments made after 12 August 2021, notified thresholds, the rules and IBBI regulations, and the way tribunals and courts apply these sections should be checked. This article is general information, not legal advice; check the official text before acting.