A practical guide for companies, creditors, and promoters on the insolvency resolution process under the Insolvency and Bankruptcy Code, 2016, before the NCLT, Principal Bench, Delhi.
Prepared for general guidance only — not a substitute for individual legal advice.
About This Guide
The Insolvency and Bankruptcy Code, 2016 (IBC) gives creditors, companies, and promoters a single, time-bound framework to resolve financial distress — either by reviving the business through a resolution plan, or, failing that, by winding it up in an orderly liquidation. For businesses in Delhi, these proceedings are heard before the National Company Law Tribunal (NCLT), Principal Bench, Delhi, with appeals to the NCLAT, also seated in Delhi.
This guide walks through the process in the sequence a company, creditor, or promoter typically encounters it — from who can bring an application, through admission and the resolution process, to what happens once a plan is approved or the company goes into liquidation.
Know which side of the table you're on: A company facing a default notice, a creditor chasing recovery, and a promoter with a personal guarantee each face different exposure and deadlines under the IBC. Identify your position first, and read the relevant sections alongside advice from an insolvency advocate.
What This Guide Covers
1. Who Can Initiate Insolvency Proceedings
2. Choosing the Right Route: CIRP, PPIRP, or Personal Guarantor Process
3. Documents & Information Required
4. Filing the Application Before the NCLT
5. Admission & the Moratorium Period
6. The CIRP Process & the Committee of Creditors
7. Resolution Plan or Liquidation
8. After Resolution: Outcomes & Common Next Steps
01 Who Can Initiate Insolvency Proceedings
Three categories of applicants can bring a corporate debtor before the NCLT.
■ Financial Creditor (Section 7) — banks, NBFCs, or bondholders, on proof of default on a financial debt.
■ Operational Creditor (Section 9) — vendors, suppliers, or employees, after issuing a statutory demand notice and provided there is no pre-existing dispute over the debt.
■ Corporate Debtor itself (Section 10) — the company, with board and shareholder approval, admitting its own default.
■ Minimum default threshold: proceedings can only be triggered where the default is at least ■1 crore, per the March 2020 amendment.
02 Choosing the Right Route
The correct process depends on the size of the business and who is filing.
■ Standard CIRP — the default route for most companies and LLPs, run by an independent Resolution Professional once the NCLT admits the application.
■ Pre-Packaged Insolvency (PPIRP) — a faster, debtor-in-possession route available to eligible micro, small, and medium enterprises, with a shorter timeline and existing management continuing to run the company.
■ Personal Guarantor Process — a separate proceeding under Part III of the IBC against promoters or directors who have personally guaranteed the company's borrowings, which can run alongside or after the company's own CIRP.
■ Confirm your business's MSME classification and default amount before assuming PPIRP eligibility.
03 Documents & Information Required
Assembling these in advance avoids delay once an application is filed.
■ Proof of debt and default — loan agreements, invoices, purchase orders, or bank statements, as applicable.
■ For operational creditors: a copy of the statutory demand notice and proof of delivery to the corporate debtor.
■ Corporate records — certificate of incorporation, board resolutions, and financial statements of the debtor company.
■ Details of the proposed Interim Resolution Professional, where required at the time of filing.
■ For personal guarantor proceedings: the guarantee deed and records of the underlying facility.
■ Any correspondence relating to disputes, settlement discussions, or part-payments concerning the debt.
04
Filing the Application Before the NCLT
The formal starting point of any insolvency proceeding.
■ File the application in the prescribed form (Form 1 for financial creditors, Form 5 for operational creditors, Form 6 for the corporate debtor) before the NCLT bench with jurisdiction over the company's registered office.
■ Attach all supporting documents establishing debt and default, along with the prescribed filing fee.
■ For operational creditors, confirm the 10-day notice period has lapsed without payment or a notice of dispute from the debtor.
■ The NCLT is required to record its decision to admit or reject the application within 14 days of filing, though in practice this timeline can extend depending on the bench's workload and any preliminary objections raised.
05
Admission & the Moratorium Period
What changes for the company the moment the NCLT admits the application.
■ The NCLT appoints an Interim Resolution Professional (IRP), who takes over management of the company from its board of directors.
■ A moratorium under Section 14 takes effect immediately, generally freezing new and pending suits, asset transfers, and enforcement of security interests against the company.
■ Creditors, including operational vendors, cannot pursue separate recovery action against the company while the moratorium is in force.
■ The moratorium continues until the CIRP concludes — either through an approved resolution plan or an order for liquidation.
06 The CIRP Process & the Committee of Creditors
The structured process that runs between admission and a final outcome.
■ The IRP invites claims from all creditors and constitutes the Committee of Creditors (CoC), made up of the company's financial creditors.
■ The CoC appoints the Resolution Professional (RP) who will run the process and invites resolution applicants to submit plans for reviving the company.
■ A resolution plan requires approval by at least 66% of the CoC's voting share before it can be submitted to the NCLT for sanction.
■ CIRP must ordinarily conclude within 180 days of admission, extendable by up to 90 days by the NCLT; courts have generally treated 330 days as the outer limit including permissible exclusions.
07 Resolution Plan or Liquidation
Two possible outcomes once the CIRP timeline runs its course.
■ Resolution: if the CoC approves a plan and the NCLT sanctions it, the company continues as a going concern under the terms of that plan, binding all stakeholders.
■ Liquidation: if no viable plan is approved in time, the NCLT orders liquidation and appoints a liquidator to realise and distribute the company's assets.
■ Liquidation proceeds are distributed under the Section 53 'waterfall' — broadly: insolvency and liquidation costs, then secured creditors and workmen's dues, employee wages, unsecured financial creditors, government dues, and finally shareholders.
■ Promoters are generally barred from bidding to regain control of the company during resolution, subject to limited exceptions under Section 29A.
08 After Resolution: Outcomes & Common Next Steps
Steps that typically follow once the process concludes.
■ Obtain certified copies of the NCLT order approving the resolution plan or ordering liquidation, for use in subsequent filings and disputes.
■ Where a resolution plan is approved, ensure implementation milestones and payment schedules are tracked and complied with as ordered.
■ Update statutory and regulatory filings — ROC records, tax registrations, and lender records — to reflect the new management or ownership under the resolution plan.
■ Creditors should confirm their admitted claim amounts and payout as per the approved plan or the liquidator's distribution schedule.
■ Promoters facing personal guarantee exposure should review whether separate proceedings under Part III remain pending despite the company's resolution or liquidation.
■ Retain all NCLT orders and RP/liquidator correspondence securely for future reference or appeal, where applicable.
an IBC matter in Delhi? Talk to our insolvency team. Call +91 8130789810 | advocatesourabhsingh@gmail.com delhilegalexpert.com/insolvency-lawyer.php
Disclaimer: This guide is a general awareness tool prepared by Delhi Legal Expert for companies, creditors, and promoters navigating insolvency matters in Delhi. It is not exhaustive, does not constitute legal advice, and should not be relied upon as a substitute for consultation with a qualified insolvency advocate. Thresholds, timelines, and procedures under the IBC are subject to amendment; please confirm current requirements with your advocate before taking any action.
