Section 58H 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 58H says how the creditor-initiated insolvency resolution process is turned into the ordinary corporate insolvency resolution process under Chapter II. The Adjudicating Authority converts it where no plan is received in time, where the debtor or its personnel fail to cooperate, or where it rejects the plan, and it must convert it when the committee of creditors resolves to do so by a sixty-six per cent. vote. 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 Adjudicating Authority shall convert the process by order if it receives no plan in the section 58D period, finds the debtor or its personnel failed to cooperate, or rejects the plan. The committee of creditors may also resolve by not less than sixty-six per cent. of the voting share to convert. The order makes five directions. After conversion, the order is deemed an order of admission under section 7 and the financial creditor who started the process is treated as the applicant.
Section 58H(1): the three grounds and the five directions
"Where the Adjudicating Authority,—
- (a) does not receive a resolution plan for approval, within the period stipulated under section 58D;
- (b) is satisfied that the corporate debtor or its personnel have failed to assist or cooperate with the resolution professional; or
- (c) rejects the resolution plan under sub-section (2) of section 58J read with sub-section (2) of section 31,
it shall, by an order,––" make five directions:
| Direction | Words of the section |
|---|---|
| (i) | convert the creditor-initiated insolvency resolution process to corporate insolvency resolution process under Chapter II, and "provisions of such Chapter shall apply" |
| (ii) | "decide the stage from which the corporate insolvency resolution process shall commence, after considering any recommendation of the committee of creditors, made in such manner as may be specified" |
| (iii) | appoint the resolution professional for the creditor-initiated process "as the interim resolution professional or the resolution professional for the corporate insolvency resolution process, as the case may be" |
| (iv) | "declare a moratorium for the purposes referred to in section 14" |
| (v) | declare that the costs incurred during the creditor-initiated process, if any, "shall be included as part of insolvency resolution process costs for the purposes of the corporate insolvency resolution process of the corporate debtor" |
The word is "shall". The ground in clause (a) links to section 58D, whose sub-section (3) also requires an order under section 58H(1) when no plan is approved in time. The ground in clause (c) links to section 58J (approval of the plan) and section 31, which is explained in our post on section 31.
Direction (ii) lets the Adjudicating Authority choose the stage from which the new process begins, which means the process does not necessarily start from the beginning; the text gives no further guide beyond "after considering any recommendation of the committee of creditors". Direction (iv) declares a moratorium "for the purposes referred to in section 14"; see the live post on the section 14 moratorium. Direction (iii) uses the interim resolution professional of the ordinary process; the appointment rules for that office are in section 16, explained in the post on appointment of the interim resolution professional.
Creditors, resolution professionals and corporate debtors facing conversion can take legal dispute resolution advice on the grounds and the stage chosen.
Section 58H(2): conversion on the committee's vote
"Where the committee of creditors, at any time during the creditor-initiated insolvency resolution process period, by a vote of not less than sixty-six per cent. of the voting share, resolves to convert the creditor-initiated insolvency resolution process to the corporate insolvency resolution process in respect of the corporate debtor, the resolution professional shall make an application for this purpose to the Adjudicating Authority in such form and manner as may be specified, and the Adjudicating Authority shall pass an order as referred to in sub-clauses (i) to (v) of sub-section (1)."
The committee decides; the resolution professional applies; the Adjudicating Authority passes the same five directions. The vote can be taken "at any time" during the process period. The cross-reference calls the items "sub-clauses (i) to (v) of sub-section (1)"; section 58H(1) prints them as (i) to (v) after clauses (a) to (c), and the same reference appears in section 58C(2)(b). It is a drafting point quoted as printed.
Section 58H(3): what follows from the conversion order
"Where the Adjudicating Authority passes an order to convert the creditor-initiated insolvency resolution process to the corporate insolvency resolution process under Chapter II—
- (a) the proceedings initiated for an avoidance transaction or fraudulent or wrongful trading or under section 47, if any, during the creditor-initiated insolvency resolution process shall continue during the corporate insolvency resolution process;
- (b) such order shall be deemed to be an order of admission of an application under section 7 and the financial creditor who initiated the creditor-initiated insolvency resolution process under section 58B, shall be considered as the applicant for that purpose; and
- (c) for the purposes of sections 43, 46 and 50, the references to 'initiation date and ending on the insolvency commencement date' shall be construed as 'creditor-initiated insolvency commencement date and ending on the insolvency commencement date.'"
Clause (a) keeps avoidance and wrongful trading proceedings alive through the conversion. Clause (b) treats the conversion order as a section 7 admission, with the financial creditor of section 58B as applicant. Clause (c) fixes the start of the look-back in sections 43, 46 and 50: it runs from the creditor-initiated insolvency commencement date, not from the "initiation date". The Amendment Act, 2026 changes the look-back words of sections 43, 46 and 50 to "initiation date and ending on the insolvency commencement date" (see section 50 in our article on sections 50 and 51); clause (c) is written against those words.
Example
Maple Auto Components Pvt Ltd is in a creditor-initiated process. The one hundred and fifty days pass without a plan. Under section 58D(3) and section 58H(1)(a), the Adjudicating Authority converts the process, decides the stage from which the corporate insolvency resolution process begins after hearing the committee's recommendation, appoints the resolution professional as interim resolution professional, declares a moratorium under section 14 and includes the costs in the new process's costs. The order is deemed an admission under section 7, with the lender that started the process as applicant. The avoidance application filed earlier continues. The names 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 when a process is converted?
Conversion changes the process, the moratorium, the costs and the look-back for avoidable transactions. Our team can help creditors, debtors and professionals plan for it, or contest the grounds, through legal dispute resolution.
Key takeaways
- The Adjudicating Authority shall convert the process on any of three grounds: no plan received in the section 58D period, failure to assist or cooperate, or rejection of the plan under section 58J(2) read with section 31(2).
- The committee of creditors may resolve to convert by not less than sixty-six per cent. of the voting share, and the resolution professional then applies.
- The order makes five directions, including the stage of commencement, appointment of the professional, a section 14 moratorium and treatment of the costs.
- Avoidance and trading proceedings continue; the order is deemed a section 7 admission with the original financial creditor as applicant.
- For sections 43, 46 and 50 the look-back runs from the creditor-initiated insolvency commencement date.
Read next
- Section 58G: moratorium in the creditor-initiated process
- Sections 58-I, 58J and 58K: withdrawal, approval of the plan and application of other provisions
- Sections 58C and 58D: objections and the period for completing the process
- The corporate insolvency resolution process: a complete guide
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.