The Insolvency and Bankruptcy Code, 2016 fundamentally changed how commercial debt recovery and corporate restructuring work in India. Since its enactment, the IBC has resolved thousands of crores in distressed debt and established the NCLT as one of the most consequential commercial courts in the country. For any creditor, corporate debtor, or resolution applicant, understanding this framework — and having an experienced IBC lawyer — is not optional.
What the IBC Actually Does
Before the IBC, creditors recovering debt from defaulting companies faced years of litigation through winding-up proceedings, SARFAESI actions, and DRT proceedings — with no guarantee of outcome. The IBC replaced this with a time-bound, value-maximising resolution process. The priority is resolution over liquidation, with a creditor-controlled Committee of Creditors making commercial decisions about the company’s future.
| The IBC is not a recovery mechanism — it is a resolution mechanism. Creditors who approach it as purely a collection tool often make strategic errors that cost them recovery value. |
The CIRP Process: Step by Step
| 01 | Application before NCLT
Financial or operational creditor files petition for default of Rs 1 crore or more. Corporate debtor can also apply voluntarily. |
| 02 | Admission and moratorium
NCLT admits the petition; an Interim Resolution Professional (IRP) is appointed; moratorium prohibits suits, asset transfers, and enforcement actions. |
| 03 | Committee of Creditors constituted
Financial creditors form the CoC. The CoC controls the resolution process and evaluates resolution plans submitted by applicants. |
| 04 | Resolution Plan approval
A resolution plan must be approved by 66% of CoC (by value) and then by the NCLT. The plan is binding on all stakeholders. |
| 05 | Liquidation (if no plan)
If no resolution plan is approved within the timeline, the NCLT orders liquidation of the corporate debtor. |
Key Players in an IBC Proceeding
| WHO DOES WHAT IN A CIRP
• Resolution Professional (RP) — Manages the corporate debtor during CIRP; facilitates the process • Committee of Creditors (CoC) — Financial creditors who control the commercial decisions during CIRP • Resolution Applicant — Entity submitting a resolution plan to take over and revive the corporate debtor • NCLT — Admits the petition, approves the resolution plan, orders liquidation if needed • NCLAT — Appellate forum for NCLT orders in IBC matters • IBBI — Insolvency and Bankruptcy Board of India; regulatory authority for the IBC ecosystem |
Where Lawyers Make the Difference in IBC Proceedings
At the filing stage
Whether to file as a financial creditor or operational creditor matters significantly — both in terms of the process available and the strategic leverage it provides. A company matter lawyer with IBC experience will ensure the petition is correctly framed, the default is properly established, and the claim is positioned to maximise recovery.
At the CoC stage
Legal counsel for CoC members advises on evaluation of resolution plans, voting decisions, and challenges to the RP’s actions. Errors at this stage can compromise the entire process and, in contested cases, be challenged before the NCLT and NCLAT.
Challenging or defending resolution plans
Rejected resolution applicants, dissenting creditors, and operational creditors all have grounds to challenge NCLT orders approving resolution plans. This is among the most litigation-intensive parts of the IBC framework, and requires a specialist insolvency litigation team with appellate capability.
IBC + AI: How Legal Technology Is Entering the Picture
AI-based legal tools are being used to track NCLT orders across benches, summarise CIRP status reports, flag resolution plan anomalies, and identify precedents on specific IBC provisions. This is genuinely valuable for large creditors managing multiple NCLT matters simultaneously. However, the advocacy in hearings, the strategy in CoC deliberations, and the judgement calls on settlement versus resolution plan remain squarely within the domain of a qualified NCLT lawyer.
| Facing an IBC Proceeding or NCLT Matter?
AKP Law represents creditors, corporate debtors, and resolution applicants in insolvency proceedings before NCLT benches across India, including Kolkata, Hyderabad, and Mumbai. Contact AKP Law: office@akplaw.in | +91-8103762924 | akplaw.in |
Frequently Asked Questions
Q What is the IBC and how does it work?
The Insolvency and Bankruptcy Code, 2016 provides a time-bound framework for resolving insolvency of companies in India. A creditor or the corporate debtor files before the NCLT, triggering a Corporate Insolvency Resolution Process (CIRP) of 180 days (extendable to 330 days), managed by a Resolution Professional and controlled commercially by the Committee of Creditors.
Q What is the NCLT?
The National Company Law Tribunal is a quasi-judicial body under the Companies Act, 2013. It handles IBC proceedings, company law disputes including oppression and mismanagement petitions, merger approvals, and other corporate matters. Appeals from NCLT go to the NCLAT and then to the Supreme Court.
Q Who can file an insolvency petition under IBC?
A financial creditor or operational creditor can file if the company has defaulted on debt of Rs 1 crore or more. The corporate debtor itself can also voluntarily initiate CIRP. The threshold was increased from Rs 1 lakh to Rs 1 crore in 2020.
Q What is the difference between NCLT and NCLAT?
NCLT is the court of first instance for company and insolvency matters. NCLAT — the National Company Law Appellate Tribunal — hears appeals from NCLT orders. Further appeal on questions of law lies to the Supreme Court.
Q How is AI changing insolvency law practice?
AI tools are being used to track NCLT judgments across benches, flag compliance issues, and review claims documents. However, strategy in IBC proceedings and representation before NCLT and NCLAT require an experienced insolvency lawyer.
Q What is the moratorium under IBC?
On admission of an insolvency petition, the NCLT declares a moratorium — a period during which no suits can be filed against the corporate debtor, no assets can be transferred, and no enforcement actions can proceed. The moratorium protects the company’s value during the resolution process.