Corporate Insolvency Resolution Process (CIRP)

Step 1 — Application: A financial creditor (bank, bond holder), operational creditor (supplier, employee), or the corporate debtor itself files an application with NCLT to initiate CIRP. Default threshold: ₹1 crore (revised from ₹1 lakh in 2020 to reduce frivolous filings).

Step 2 — NCLT Admission: NCLT admits the application and declares "Insolvency Commencement Date" (ICD). A moratorium is imposed — no suits, debt recovery, or enforcement of security interest during CIRP.

Step 3 — Interim Resolution Professional (IRP): Appointed by NCLT (or suggested by applicant); takes over management of the corporate debtor.

Step 4 — CoC Formation: IRP constitutes the CoC of all financial creditors within 30 days of ICD.

Step 5 — Resolution Professional (RP): CoC appoints RP (may confirm IRP). RP manages company, invites resolution plans from eligible applicants (Resolution Applicants).

Step 6 — Valuation: RP appoints two registered valuers to provide Fair Value and Liquidation Value of the corporate debtor's assets — the floor for evaluating resolution plans.

Step 7 — Resolution Plan: Successful resolution applicant submits a plan; CoC approves with ≥66% vote; NCLT approves if plan meets IBC requirements.

CIRP Timeline:

• Standard period: 180 days from ICD
• One-time extension: Up to 90 days additional (requires ≥66% CoC vote + NCLT approval)
• Maximum period including litigation exclusions: 330 days from ICD (after Supreme Court ruling in Essar Steel case, 2019)
• Beyond 330 days: Company must go to liquidation