Section 58G 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.
In the creditor-initiated insolvency resolution process, the moratorium is not automatic. Section 58G lets the resolution professional apply for it, after approval, and the moratorium runs from the date of the application until the Adjudicating Authority confirms or rejects it. The section is inserted by the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026). It is not in the IBBI consolidated text of the Code amended up to 12 August 2021, and this article explains it from the Amendment Act.
The resolution professional may apply for a moratorium on the terms of section 14(1) read with section 14(3), after obtaining the approval of the committee of creditors, or, before the committee is formed, of financial creditors in the notified class representing not less than fifty-one per cent. in value. The moratorium commences from the date of the application and continues through the process period; the Adjudicating Authority may confirm it or reject the application. The resolution professional must announce the filing and any rejection.
What is the moratorium borrowed from?
Section 58G(1) refers to "a moratorium for the purposes referred to in sub-section (1) read with sub-section (3) of section 14, which shall, mutatis mutandis apply, to the proceedings under this Chapter". Section 14 of the consolidated text provides in sub-section (1) for the Adjudicating Authority to declare, on the insolvency commencement date, a moratorium prohibiting four kinds of act: suits and proceedings against the corporate debtor and execution of judgements; transferring, encumbering, alienating or disposing of its assets; action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property, including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); and the recovery of property by an owner or lessor where the corporate debtor occupies or possesses it. Sub-section (3) says the sub-section (1) moratorium does not apply to transactions, agreements or arrangements notified by the Central Government in consultation with a financial sector regulator or other authority, or to a surety in a contract of guarantee to a corporate debtor. The reader should check the current law for the corresponding provision of the 2002 Act.
Section 14 has live posts on the site: the section 14 moratorium and its extension into liquidation and the moratorium and the assets it protects. Section 9 of the Amendment Act, 2026 amends section 14: in sub-section (1) the reference to sub-sections "(2) and (3)" becomes "(2), (2A) and (3)", and an Explanation to sub-section (3)(b) says that sub-section (1) also applies where the surety seeks to initiate or continue any action or proceedings against the corporate debtor pursuant to a contract of guarantee. Section 58G borrows only sub-section (1) read with sub-section (3), so how the other changes read with it is for the reader to check.
The point of difference from the ordinary process is that section 14(1) is a declaration on the insolvency commencement date, whereas here the resolution professional must ask. A lender, debtor or professional who wants to plan around this can take legal dispute resolution advice on the timing of the application.
Section 58G(1): the application and its approval
"During the creditor-initiated insolvency resolution process period, the resolution professional may, after obtaining the approval of the committee of creditors, make an application to the Adjudicating Authority for a moratorium".
The proviso gives an earlier route: "the resolution professional may file such application before the constitution of the committee of creditors, after obtaining approval of the financial creditors of the corporate debtor belonging to the class of financial institutions notified under sub-section (1) of section 58B, who represent not less than fifty-one per cent. in value of the debt due to such financial creditors, in such manner as may be specified."
| Stage | Approval needed |
|---|---|
| Committee of creditors constituted | the approval of the committee of creditors |
| Before the committee is constituted | approval of financial creditors in the class notified under section 58B(1), representing not less than fifty-one per cent. in value of the debt due to them |
The word is "may": the resolution professional is not bound to apply. Who forms the committee and when is dealt with elsewhere in the Code and not in section 58G. The class of financial institutions is notified under section 58B(1) and no notification is in the texts consulted; see our article on section 58B.
Section 58G(2): when it starts and what the Adjudicating Authority does
"Where an application has been made in sub-section (1), a moratorium for the purposes referred to in sub-section (1) read with sub-section (3) of section 14 shall commence from the date of the application and continue to be in operation during the creditor-initiated insolvency resolution process period, and the Adjudicating Authority may confirm the moratorium, if it is satisfied that the moratorium is required for the proper and efficient conduct of the creditor-initiated insolvency resolution process, or reject the application."
Three things stand out.
- Effect from the application. The moratorium commences "from the date of the application", before the Adjudicating Authority has decided. The section says so in terms.
- The test for confirmation. The Adjudicating Authority confirms if it is satisfied that the moratorium "is required for the proper and efficient conduct of the creditor-initiated insolvency resolution process".
- Rejection. The Adjudicating Authority may "reject the application". The section does not say from what date the moratorium stops if the application is rejected, nor what happens to acts done in between. The text is silent, and the reader should check the official text and any rules.
The duration is stated as the "creditor-initiated insolvency resolution process period", which the Explanation at the end of section 58B defines as the period from the creditor-initiated insolvency commencement date until an order under section 58H(1), section 58-I(1) or section 58J read with section 31.
Section 58G(3): public announcement
"The resolution professional shall make public announcement of the following, in such form and manner as may be specified, namely:— (a) filing of application under sub-section (1); and (b) order of the Adjudicating Authority rejecting the application under sub-section (2), if any." The announcement of the filing tells creditors and others that a moratorium has commenced from the application date. The announcement of a rejection is the other half. No announcement of a confirmation is required by sub-section (3).
Example
Redwood Textiles Pvt Ltd is in a creditor-initiated process and the committee of creditors has been constituted. A supplier has filed a suit to recover dues. The resolution professional, Ms Bose, obtains the committee's approval and applies for a moratorium on 5 of the month. She announces the filing. From 5 of the month, the moratorium in the terms of section 14(1) read with section 14(3) is in operation. Later the Adjudicating Authority, satisfied that it is required for the proper and efficient conduct of the process, confirms it. Had it rejected the application, she would announce the order. The names and dates are invented.
Commencement and sources
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 section has been notified. The details of the process are left to rules and regulations that are not in the texts consulted.
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 moratorium application?
The first days of the process decide how much of the debtor's business and assets are protected. Our team can help resolution professionals, lenders and corporate debtors with the timing, approvals and notices through legal dispute resolution.
Key takeaways
- The moratorium in the creditor-initiated process is applied for by the resolution professional, after approval; it is not declared automatically.
- Before the committee is constituted, approval comes from financial creditors in the notified class representing not less than fifty-one per cent. in value.
- The moratorium commences from the date of the application and continues through the process period, unless the Adjudicating Authority rejects the application.
- The Adjudicating Authority confirms if it is satisfied that it is required for the proper and efficient conduct of the process.
- The resolution professional announces the filing, and any rejection.
Read next
- Section 58H: conversion into a corporate insolvency resolution process
- Sections 58E and 58F: the resolution professional and management
- The Section 14 moratorium and its extension into liquidation
- Debtor in possession under sections 58A to 58K
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.