Section 20 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.
Section 20 sets the goal of the interim resolution professional's management: protect and preserve the value of the corporate debtor's property and keep the business running as a going concern. It then gives five authorities to do so, including the authority to raise interim finance subject to a consent rule. This article reads it as per the IBBI consolidated text of the Code amended up to 12 August 2021. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 does not amend section 20.
The interim resolution professional "shall make every endeavour to protect and preserve the value of the property of the corporate debtor and manage the operations of the corporate debtor as a going concern". The professional may appoint accountants, legal or other professionals, enter into, amend or modify contracts, raise interim finance, issue instructions to personnel, and take all actions necessary to keep the business a going concern. Creating security interest over encumbered property needs prior consent of the secured creditor unless the property's value is at least twice the debt.
Sub-section (1): the purpose
Section 20(1): "The interim resolution professional shall make every endeavour to protect and preserve the value of the property of the corporate debtor and manage the operations of the corporate debtor as a going concern." Two verbs matter: protect and preserve value, and manage as a going concern. The sub-section sets the standard of effort ("every endeavour") rather than a promise of outcome. A professional, lender or director unsure how far that standard reaches can take a legal consultation.
This follows the vesting of management in the professional under section 17 and the duty to monitor assets and manage operations under section 18(d). Our post on the duties of the interim resolution professional and the resolution professional places section 20 in that sequence.
Sub-section (2): the five authorities
"For the purposes of sub-section (1), the interim resolution professional shall have the authority" for the following.
| Clause | Authority |
|---|---|
| (a) | to appoint accountants, legal or other professionals as may be necessary |
| (b) | to enter into contracts on behalf of the corporate debtor or to amend or modify the contracts or transactions which were entered into before the commencement of corporate insolvency resolution process |
| (c) | to raise interim finance provided that no security interest shall be created over any encumbered property of the corporate debtor without the prior consent of the creditors whose debt is secured over such encumbered property |
| (d) | to issue instructions to personnel of the corporate debtor as may be necessary for keeping the corporate debtor as a going concern |
| (e) | to take all such actions as are necessary to keep the corporate debtor as a going concern |
Clause (b) is notable: the authority covers contracts "entered into before the commencement" of the process as well as new ones. The text does not say what happens to a counterparty's rights if a contract is amended; the section is silent on that.
The proviso to clause (c): twice the debt
A proviso follows clause (c): "no prior consent of the creditor shall be required where the value of such property is not less than the amount equivalent to twice the amount of the debt." So the consent requirement is lifted where the value of the encumbered property is at least twice the amount of the debt secured on it.
Example. Kulkarni Plastics Private Limited is in the process. Its machinery is mortgaged to a lender for a debt of Rs 2 crore, and the machinery is valued at Rs 5 crore. The interim resolution professional wants to raise interim finance by creating a further security interest over the machinery. Twice the debt is Rs 4 crore; the value of Rs 5 crore is not less than that, so no prior consent of the lender is required under the proviso. If the machinery were valued at Rs 3 crore, the lender's prior consent would be required.
Who values the property, and when, is not stated in the section.
Interim finance is a defined term: section 5(15) means any financial debt raised by the resolution professional during the insolvency resolution process period, and "such other debt as may be notified"; see our article on section 5(12) onwards. What has been notified is not in the texts consulted. The costs of raising such finance form part of the insolvency resolution process costs in section 5(13).
A lender asked to consent, or a professional about to create security, should check the security documents and the valuation before the step is taken.
How section 20 differs from section 28
Section 20 gives the interim resolution professional authority; section 28, which applies to the resolution professional, requires prior approval of the committee of creditors for listed actions, including raising interim finance in excess of an amount decided by the committee and creating any security interest over the assets of the corporate debtor. The two sections speak to different office-holders and different stages; read the section 28 article for the resolution professional's position.
Reading the section for each party
- Suppliers and customers. The authority to enter into, amend or modify contracts means counterparties may be dealing with the interim resolution professional on contracts entered into before the process.
- Secured creditors. The consent and the twice-the-debt test protect secured creditors on encumbered property.
- Employees and managers. Clause (d) lets the professional issue instructions to personnel.
- Directors. Their powers stand suspended under section 17(1)(b); clause (d) here is how instructions to personnel are given.
What the 2026 Act and later texts say
The 2026 Act does not amend section 20. Sections close to it, including 18, 19, 21 and 25, are amended, and are covered in the sibling articles. 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 those changes have been notified. The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 carry the detail of the process; the copy consulted is amended up to 09-06-2026 as printed under its title. 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 going-concern decision?
Decisions on contracts, interim finance and security during the process can affect every creditor. A legal consultation can help a professional, a secured lender or a director read these authorities against the papers in front of them.
Key takeaways
- The interim resolution professional must make every endeavour to protect and preserve value and manage operations as a going concern.
- Five authorities are listed: hiring professionals, contracts, interim finance, instructions to personnel, and necessary actions.
- Security over encumbered property for interim finance needs prior consent of the secured creditor unless the property's value is not less than twice the debt.
- Section 20 is not amended by the 2026 Act.
Read next
- Section 17: management by the interim resolution professional
- Section 21: committee of creditors
- Section 28: actions that need the committee's prior approval
- Duties of the IRP and RP under sections 17, 20 and 25
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.