Insolvency and Bankruptcy Code: What Happens When a Corporate Borrower Goes to NCLT

23 Jun 2026 · 2 min read · 1 views

NCLT Resolution Professional CIRP

The Insolvency and Bankruptcy Code (IBC), 2016 established a unified, time-bound framework for resolving insolvency of companies, partnerships, and individuals, replacing a previously fragmented set of laws and forums.

Initiating the process. A financial creditor, operational creditor, or the corporate debtor itself can file an application with the National Company Law Tribunal (NCLT) to initiate the Corporate Insolvency Resolution Process (CIRP) once a default has occurred above the applicable threshold.

Moratorium. Once CIRP is admitted, a moratorium takes effect, pausing pending legal proceedings and asset transfers against the corporate debtor while a resolution is worked out.

Resolution Professional. An insolvency professional is appointed to take over management of the company's affairs, invite resolution plans from prospective investors, and place viable plans before the Committee of Creditors for approval.

Outcome. If a resolution plan is approved and sanctioned by the NCLT, the company continues under new terms; if no viable plan emerges within the statutory timeline, the company can move into liquidation.

Frequently Asked Questions

The Committee of Creditors (CoC), made up primarily of financial creditors, votes on resolution plans; an approved plan then needs to be sanctioned by the NCLT to take legal effect.

No — IBC applies to companies, limited liability partnerships, and, under separate provisions, individuals and partnership firms, though most publicised cases involve larger corporate defaults given the amounts involved.

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