Section 125 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.
Every bankruptcy needs a bankruptcy trustee to take charge of the estate of the bankrupt. Section 125 explains how that trustee is chosen: the debtor or creditor may propose an insolvency professional, the Board confirms or nominates, and the Adjudicating Authority appoints the trustee in the bankruptcy order itself. This article reads the section as printed in the IBBI consolidated text of the Code amended up to 12 August 2021. For help with a live bankruptcy file, a legal consultation is a sensible first step.
If an insolvency professional is proposed as bankruptcy trustee in the application under section 122 or 123, the Adjudicating Authority directs the Board within seven days of receiving the application to confirm that no disciplinary proceedings are pending against him, and the Board answers within ten days. If no trustee is proposed, the Authority asks the Board within seven days to nominate one, and the Board nominates within ten days. The trustee is then appointed by the Adjudicating Authority in the bankruptcy order under section 126.
Where section 125 fits
Section 125 sits in Chapter IV of Part III, between the interim moratorium of section 124 and the bankruptcy order of section 126. The interim moratorium and the appointment of the trustee are covered together in our article on the bankruptcy trustee and the section 124 interim moratorium, and the bankruptcy order itself in our article on section 126. This article adds the sub-section-by-sub-section reading of section 125.
Section 125(1) and (2): a trustee is proposed
Direction (sub-section (1)). "If an insolvency professional is proposed as the bankruptcy trustee in the application for bankruptcy under section 122 or section 123, the Adjudicating Authority shall direct the Board within seven days of receiving the application for bankruptcy to confirm that there are no disciplinary proceedings pending against such professional."
Answer (sub-section (2)). The Board "shall within ten days of the receipt of the direction under sub-section (1) in writing either":
- (a) "confirm the appointment of the proposed insolvency professional as the bankruptcy trustee for the bankruptcy process"; or
- (b) "reject the appointment of the proposed insolvency professional as the bankruptcy trustee and nominate another bankruptcy trustee for the bankruptcy process".
The proposal can come from the debtor (section 122(2)) or the creditor (section 123(4)); see our articles on sections 121 and 122 and on section 123. The Board's check is limited by the text to whether disciplinary proceedings are pending. If they are, the Board rejects and nominates someone else.
Section 125(3) and (4): no trustee proposed
Direction (sub-section (3)). "Where a bankruptcy trustee is not proposed by the debtor or creditor under section 122 or 123, the Adjudicating Authority shall direct the Board within seven days of receiving the application to nominate a bankruptcy trustee for the bankruptcy process."
Nomination (sub-section (4)). "The Board shall nominate a bankruptcy trustee within ten days of receiving the direction of the Adjudicating Authority under sub-section (3)."
The Authority's direction is the same in both cases: within seven days of receiving the application. What differs is what the Board is asked to do, confirm or nominate.
Section 125(5): appointment in the bankruptcy order
"The bankruptcy trustee confirmed or nominated under this section shall be appointed as the bankruptcy trustee by the Adjudicating Authority in the bankruptcy order under section 126."
There is no separate appointment order. The trustee is appointed in the bankruptcy order itself, and section 128(1)(a) provides that the estate of the bankrupt vests in the bankruptcy trustee as provided in section 154; see our article on sections 127 and 128. The section prints no period within which the Authority must make the bankruptcy order.
| Step | Who | Period printed | Sub-section |
|---|---|---|---|
| Direction to the Board to confirm the proposed professional | Adjudicating Authority | Within seven days of receiving the application | (1) |
| Confirmation, or rejection with nomination | Board | Within ten days of receiving the direction | (2) |
| Direction to the Board to nominate where none proposed | Adjudicating Authority | Within seven days of receiving the application | (3) |
| Nomination | Board | Within ten days of receiving the direction | (4) |
| Appointment | Adjudicating Authority, in the bankruptcy order under section 126 | Not stated | (5) |
Example. Ishaan Kapoor's bankruptcy application proposes Ms Radhika Sen, an insolvency professional, as bankruptcy trustee. Within seven days of receiving the application the Adjudicating Authority writes to the Board. Within ten days the Board answers that disciplinary proceedings are pending against Ms Sen, rejects her appointment and nominates another professional. When the Authority passes the bankruptcy order, it names the nominee as the bankruptcy trustee. Had Ishaan proposed nobody, the Authority would have asked the Board to nominate in the first place.
Points to note
- The Board is the filter. Whether a trustee is proposed or not, the Board's confirmation or nomination is the basis for the appointment.
- Periods are the same as in other appointments. Seven days for the Authority and ten days for the Board match the periods in section 97 for the resolution professional; see our article on sections 97 and 98.
- Replacement of a trustee is elsewhere. Section 125 deals only with the first appointment. Replacement is dealt with in section 145; see our article on sections 143 to 145.
- No period for the order. The text is silent on how long the Authority may take between the Board's answer and the bankruptcy order.
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.
The Amendment Act, 2026
The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026) does not amend section 125 as printed in the texts consulted. Section 55 of the Act amends the neighbouring section 124 by inserting sub-section (4): "The provisions of this section shall not apply where an application is filed for initiating a bankruptcy process in respect of a personal guarantor to a corporate debtor." That change is explained in our article linked above on section 124; this article does not repeat it. 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 the change has been notified.
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 in a bankruptcy where a trustee must be chosen?
Who becomes the trustee affects how the estate is run and how quickly creditors are heard. A legal consultation can help you decide whether to propose a professional in the application and prepare the application so that the Board's check goes smoothly.
Key takeaways
- A debtor or creditor may propose an insolvency professional as bankruptcy trustee in the application.
- The Authority directs the Board within seven days of receiving the application; the Board answers within ten days.
- If none is proposed, the Board nominates.
- The trustee is appointed in the bankruptcy order under section 126.
- Disciplinary proceedings pending against the proposed professional lead to rejection and a fresh nomination.
Read next
- Sections 127 and 128: validity and effect of the bankruptcy order
- Section 129: statement of financial position of the bankrupt
- The bankruptcy trustee and the section 124 interim moratorium
- Sections 121 and 122: application for bankruptcy
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.