Insolvency & Debt Resolution Advisory India: Who Needs It and Who Does Not
Whether Insolvency & Debt Resolution Advisory India applies to a given business is the first thing worth settling, and it is where most of the early questions land. The questions below are the ones raised most often in practice; the full scope of the service is on the Insolvency & Debt Resolution Advisory India page.
Who can file for insolvency resolution (CIRP) against a company?
Three categories: a financial creditor under Section 7 (banks, NBFCs, bondholders, or anyone who has extended a financial debt), an operational creditor under Section 9 (vendors, suppliers, employees, and government dues above the threshold), or the corporate debtor itself under Section 10, filed voluntarily pursuant to a special resolution of its members (or a resolution of at least three-fourths of the partners, for an LLP).
In practice: Section 7 applications are generally easier to get admitted than Section 9 applications, because financial debt and default are usually more straightforward to evidence, and NCLT jurisprudence gives operational creditors a harder look at any pre-existing dispute the debtor raises.
What is the minimum default amount required to file under IBC?
Section 4 of the Code prescribes the minimum amount of default for triggering CIRP, and the Central Government is empowered to notify and revise this threshold by notification. The threshold was significantly raised in 2020. Because this figure is set by government notification and has changed before, we verify the currently applicable threshold against the latest IBBI/MCA notification at the time of filing rather than relying on a fixed number.
In practice: Do not rely on a remembered figure from a few years ago — always confirm the current notified threshold before drafting, since filing below the applicable minimum results in outright dismissal regardless of how strong the underlying claim is.
Can the promoters buy back their own company during CIRP?
Only if they are not disqualified under Section 29A of the Code. This provision — introduced specifically to prevent promoters who caused the default from regaining control cheaply — bars persons connected with an undischarged NPA account (subject to specified cure periods), wilful defaulters, persons convicted of certain offences, and several other categories from submitting a resolution plan. A promoter who does not fall into any of these bars can submit a plan like any other resolution applicant.
In practice: Section 29A eligibility is one of the most litigated aspects of the Code. We run a preliminary Section 29A screen for any promoter or connected party considering a resolution plan before they spend time and money preparing one that would be rejected on eligibility alone.
What is a Pre-Packaged Insolvency Resolution Process (PPIRP) and who can use it?
PPIRP, introduced under Section 54A and the related Chapter III-A of the Code, is a faster, more promoter-friendly insolvency route available only to corporate debtors classified as micro, small, or medium enterprises (MSMEs) under the MSME Development Act. It requires the corporate debtor to negotiate a base resolution plan informally with financial creditors first, secure approval from at least 66% of unrelated financial creditors, and only then file with NCLT — with the existing management typically continuing to run day-to-day operations during the process, unlike a standard CIRP.
In practice: PPIRP is underused relative to its potential for eligible MSMEs, largely because the pre-filing negotiation with creditors requires real financial preparation — a credible base resolution plan, honest cash-flow projections, and creditor engagement — work we do with clients well before any filing.
What is the Committee of Creditors and how does voting work?
The CoC comprises the financial creditors of the corporate debtor, other than related parties (subject to the limited exceptions in section 21(2)), with voting share proportional to the value of their admitted financial debt. Most significant decisions — approval of a resolution plan, appointment/replacement of the RP, raising interim finance beyond specified limits — require a 66% majority vote. Certain other decisions require a 51% majority.
In practice: We frequently support smaller financial creditors who feel outvoted by a dominant lender. While the Code gives commercial wisdom to the CoC's majority decision significant deference from courts, minority creditors still have specific rights — to be heard, to receive information, and in limited circumstances to challenge a plan — that we help clients exercise effectively.
Can a creditor withdraw an application after CIRP has been admitted?
Yes, but only through the mechanism under Section 12A, which requires the applicant creditor's withdrawal request to be approved by 90% of the CoC's voting share, and then approved by NCLT. Before the CoC is even constituted, withdrawal is comparatively simpler. This high threshold reflects the Code's design — once a CIRP is admitted, it is meant to run its collective course rather than be settled bilaterally between the original applicant and the debtor at the expense of other creditors' interests.
In practice: Debtors may assume that settling with the original petitioning creditor automatically ends the CIRP. It does not, once a CoC exists — every other creditor who has since filed a claim now has an interest in the outcome, and the 90% threshold is genuinely difficult to achieve without broad settlement across the creditor base.
What role does an Insolvency Professional (IP) play, and is PNPC an Insolvency Professional?
An Insolvency Professional is a specifically licensed professional registered with the IBBI, who acts as the Interim Resolution Professional (IRP) and, once confirmed, the Resolution Professional (RP) — running the corporate debtor's affairs, managing the claims and resolution-plan process, and reporting to the CoC and NCLT. PNPC provides Chartered Accountancy advisory services around the process — financial due diligence, claims support, valuation coordination, and tax structuring — and works alongside IBBI-registered Insolvency Professionals and insolvency counsel; we clarify our specific role in any engagement at the outset.
In practice: Clients sometimes assume any CA firm can act as the IRP/RP. That role requires specific IBBI registration and empanelment, which is a distinct professional qualification from general CA practice. We are transparent about where our advisory scope ends and where a registered IP or advocate needs to be engaged.
How does PNPC support a creditor who wants to file a claim in an ongoing CIRP?
We verify the underlying debt against the creditor's own books and the corporate debtor's records where available, compute the exact claim amount including any contractually or statutorily due interest, assemble the documentary proof required under the prescribed claim form (Form B for operational creditors, Form C for financial creditors), and file within the timeline specified in the RP's public announcement — a deadline that, once missed, can significantly prejudice recovery.
In practice: Claims filed with incomplete documentation are frequently admitted at a provisional or reduced value, or rejected outright pending further proof — which can mean missing out on a distribution round entirely. We treat claims preparation with the same rigour as a tax assessment response.
What happens if the IRP or RP finds evidence of fraudulent conduct by the erstwhile management?
Section 66 empowers the RP or liquidator to apply to NCLT for orders against persons who were knowingly party to carrying on the business of the corporate debtor with intent to defraud creditors or for any fraudulent purpose, potentially making them personally liable to contribute to the corporate debtor's assets. Separately, Section 19 obliges the erstwhile management to fully cooperate with and hand over records to the IRP/RP, and non-cooperation can itself have penal consequences under the Code.
In practice: We advise outgoing management, from the moment of admission, to cooperate fully and document that cooperation — resistance or record-withholding is not just unhelpful, it actively strengthens any later Section 66 or non-cooperation case against them personally.
Where this sits in the wider engagement
Insolvency & Debt Resolution Advisory India rarely arrives on its own. The statutory basis and the current requirements are set out on the Insolvency & Debt Resolution Advisory India service page, and the related services are grouped under Corporate Finance.
What PNPC does
PNPC Global has practised since 1986 across India and the UAE. On Insolvency & Debt Resolution Advisory India we support the financial due diligence, claims support, valuation coordination, and tax structuring workstreams, and coordinate with IBBI-registered Insolvency Professionals and insolvency counsel.