CS Professional · Corporate Restructuring, Valuation and Insolvency

Application for Corporate Insolvency Resolution Process: Study Guide

An operational creditor starts CIRP by serving a demand notice under Section 8. If the debtor does not pay or raise a dispute within ten days, the creditor files an application under Section 9 with the required documents. The Adjudicating Authority admits or rejects it within fourteen days, and CIRP begins on admission.

What this chapter covers

This chapter covers how an operational creditor moves a corporate debtor into the corporate insolvency resolution process (CIRP). The path is: identify an operational debt, serve a demand notice under Section 8, wait ten days for payment or a dispute, file under Section 9, and get an order of admission or rejection. You also study the interim resolution professional, the date CIRP commences, and the moratorium that follows.

The chapter also sets out how the financial creditor route differs. Section 7 lets a financial creditor apply when a default has occurred, and the Adjudicating Authority checks the default from information utility records or other evidence. Comparing Sections 7 and 9 is a favourite way to frame questions. Section 95 deals with applications against partners and firms, and you should not confuse it with the corporate debtor route.

This chapter is the entry gate to the rest of Paper 6 insolvency content. The later topics, such as the resolution plan, the committee of creditors, liquidation and winding up, all assume CIRP has begun. If you are clear on how it begins, the later chapters are easier to follow. The insolvency part of Paper 6 is a separate section of the paper and is tested through case-based written answers.

Questions on this chapter are usually fact-based: a supplier sends a notice, the company replies or does not, and you must say whether the application will be admitted. The answer follows a fixed pattern of provision, facts, conclusion, and the Section 9(5) conditions give you a ready checklist. Time limits, documents and grounds for rejection are exact, so precise recall earns marks that vague answers lose. The same skill carries over to Section 7 questions and to the Insolvency and Bankruptcy elective.

Application for Corporate Insolvency Resolution Process: topics in the order to study them

1Operational Creditor and Operational DebtYou must know who can use Section 9 and what debt qualifies before any procedure makes sense.
2Demand Notice under Section 8 and Debtor's ReplyThe notice and the ten-day reply window are the first step and decide whether Section 9 can be used.
3Filing of Application under Section 9Filing follows only after the ten days lapse with no payment or dispute notice, and it needs specific documents.
4Resolution Professional Proposal and Admission or RejectionOnce the application is filed, you learn the interim resolution professional proposal and the grounds for admission or rejection.
5Commencement of CIRP and Moratorium ConsequencesThis follows admission, because CIRP starts from the date of admission and the moratorium effects flow from that.
6Case Law on Section 9 ApplicationsRead the cases last, once the provisions are clear, so you can see how disputes and defects are treated in practice.

How to prepare Application for Corporate Insolvency Resolution Process

Treat this chapter as a timeline with a checklist at each stage. Learn the sequence first, then the conditions, then apply them to facts.

Draw a timeline: default, demand notice, ten days, Section 9 application, fourteen days for the order, and commencement on admission.
Read Sections 8 and 9 line by line from the Act and note the exact words, such as dispute, record of pending suit or arbitration, and payment evidence.
Make two lists from Section 9(5): the five conditions for admission and the five grounds for rejection. Note the seven-day rectification proviso for an incomplete application.
Prepare a short table in your notes comparing Sections 7 and 9: who applies, notice needed, documents, and how default is checked.
Learn how the interim resolution professional is proposed and appointed under Sections 9(4) and 16, including the reference to the Board when no name is proposed.
Read the case law in your study material and write one line on the rule each case settles, especially on what counts as a dispute.
Practise two or three fact-based problems in the provision, analysis, conclusion format, and check each against the checklists.

Common mistakes in Application for Corporate Insolvency Resolution Process

Applying Section 9 rules to a financial creditor, or the reverse.
Fix: Remember that only Section 9 needs a demand notice and a ten-day wait. Section 7 turns on default and proof of it, such as an information utility record.
Saying the Adjudicating Authority has to admit the application once ten days pass.
Fix: Always check each Section 9(5) condition against the facts, especially dispute, payment, and pending disciplinary proceedings against the proposed professional.
Mixing up the ten-day, fourteen-day and seven-day periods.
Fix: Tie each to its step: ten days for the debtor's reply, fourteen days for the order, seven days to fix a defect.
Treating any reply from the debtor as a valid dispute.
Fix: Quote the Section 8(2)(a) wording and the case law, and say whether the dispute existed and was raised on time. State your conclusion on the facts.
Placing the start of CIRP at the date of the demand notice or filing.
Fix: Write that CIRP commences from the date of admission under Section 9(6).
Writing the case law as a list of names without the rule.
Fix: Learn only the cases in your study material, and attach one clear principle to each before using it in an answer.

Last-day revision: Application for Corporate Insolvency Resolution Process

An operational creditor serves a demand notice or a copy of the invoice under Section 8(1) after a default.
The corporate debtor has ten days from receipt to reply under Section 8(2).
The reply can show a dispute, or a record of a suit or arbitration filed before the notice was received.
The reply can also show payment, by an attested record of electronic transfer or of the creditor encashing a cheque.
Section 9 filing is allowed after ten days if there is no payment and no notice of dispute.
Section 9(3) documents: invoice or demand notice, affidavit of no dispute notice, bank certificate if available, information utility record if available, other proof.
The operational creditor may propose an interim resolution professional under Section 9(4).
The Adjudicating Authority must admit or reject within fourteen days of receiving the application.
An incomplete application gets a notice to fix the defect within seven days before rejection.
CIRP commences from the date of admission of the application.
Under Section 16, the Board recommends an insolvency professional within ten days if the operational creditor proposes none.
Section 7 is the financial creditor route; Section 95 covers partners and firms.

Application for Corporate Insolvency Resolution Process practice questions

Application for Corporate Insolvency Resolution Process: frequently asked questions

Who can file under Section 9?

An operational creditor can file after serving a demand notice or invoice copy and waiting ten days without receiving payment or notice of a dispute. The filing is made before the Adjudicating Authority in the prescribed form with the fee.

How long does the debtor have to reply to a demand notice?

The corporate debtor has ten days from receipt of the demand notice or invoice copy. In that time it must bring to the creditor's notice a dispute, or a record of a suit or arbitration filed before receiving the notice, or proof of payment.

Can the application be rejected for being incomplete?

Yes, but the Adjudicating Authority must first give notice to the applicant to rectify the defect within seven days of receiving that notice. Rejection follows only if the defect is not fixed.

When does CIRP begin?

CIRP commences from the date of admission of the application by the Adjudicating Authority. The date of the demand notice or of filing does not start the process.

How is the interim resolution professional chosen in an operational creditor case?

The operational creditor may propose one in the application. If it does not, the Adjudicating Authority refers to the Board, which recommends a name within ten days. A proposed professional is appointed only if no disciplinary proceedings are pending against them.