Corporate Restructuring, Valuation and Insolvency · Application for Corporate Insolvency Resolution Process

Commencement of CIRP and Moratorium Consequences under IBC

Updated 11 October 2026 · Fact-checked

CIRP begins on the date the Adjudicating Authority admits the application under section 7, 9 or 10. On admission, it declares a moratorium under section 14, appoints an interim resolution professional and orders a public announcement. The moratorium stops suits, asset transfers, security enforcement and recovery of property from the debtor.

Understand Commencement of CIRP and Moratorium Consequences

A corporate insolvency resolution process (CIRP) does not start when a creditor files an application or sends a demand notice. It starts when the Adjudicating Authority (NCLT) admits the application. For an operational creditor's application, section 9(6) says the CIRP commences from the date of admission under section 9(5). This date is the insolvency commencement date. Every later timeline is counted from it.

On admission, section 13(1) requires the Adjudicating Authority to do three things by order: declare a moratorium under section 14, cause a public announcement of the CIRP and call for claims under section 15, and appoint an interim resolution professional (IRP) under section 16. The public announcement is made immediately after the IRP is appointed (section 13(2)).

The moratorium is a protective freeze. It gives the company breathing space so that assets are not sold off or seized while a resolution plan is sought. Under section 14(1), it prohibits four things: suits and proceedings against the corporate debtor, including execution of decrees; transfer, encumbrance or disposal of its assets; action to enforce security interest, including under the SARFAESI Act, 2002; and recovery of property by an owner or lessor where the debtor occupies it.

The freeze has limits. Essential goods or services as specified must not be cut off (section 14(2)). Supplies the IRP or RP considers critical to preserve value and run the company as a going concern also continue, unless dues for that supply during the moratorium are unpaid (section 14(2A)). Licences, permits and similar grants cannot be suspended or terminated on the ground of insolvency, if current dues are paid. The moratorium does not apply to notified transactions or to a surety in a contract of guarantee to the corporate debtor (section 14(3)).

The moratorium runs from the date of the order till the CIRP ends. If the Adjudicating Authority approves a resolution plan under section 31(1) or passes a liquidation order under section 33, it ceases from the date of that approval or order (section 14(4)). The public announcement must state the date on which the CIRP closes, which is the 180th day from admission (section 15(1)(f)).

Key rules to remember

Commencement date: CIRP commences on the date of admission of the application (sections 7, 9 or 10); For section 9, see section 9(6). Not the filing date and not the demand notice date.
Orders on admission: Moratorium (s.14) + public announcement (s.15) + appointment of IRP (s.16); Section 13(1). Announcement is made immediately after the IRP is appointed (s.13(2)).
Acts barred by moratorium: Section 14(1)(a)-(d): suits and execution; transfer or disposal of assets; enforcement of security interest including SARFAESI; recovery of property by owner or lessor; Learn all four limbs in order.
Protected supplies and grants: s.14(2) essential goods and services; s.14(2A) critical supplies; Explanation: licences not terminated on insolvency grounds; Critical supplies can stop if moratorium-period dues are unpaid. Licences are protected only if current dues are paid.
Exclusions: Section 14(3): notified transactions; surety in a contract of guarantee to the corporate debtor; The moratorium does not apply to these.
Duration of moratorium: From date of order till CIRP completion; ends on plan approval (s.31(1)) or liquidation order (s.33); Section 14(4) and proviso.
CIRP closing date in announcement: 180th day from date of admission; Section 15(1)(f).
Pre-pack moratorium: Declared with the admission order under section 54C; runs till pre-pack period ends; Section 54E applies section 14(1) read with 14(3) mutatis mutandis.

How to solve Commencement of CIRP and Moratorium Consequences questions

Use this method for any question on commencement of CIRP or the effect of the moratorium. Write provision, facts, conclusion.

1Identify the route: section 7, 9 or 10 application, or a pre-pack under section 54C.
2Fix the commencement date: the date of the admission order, not filing or notice date.
3List the orders that follow admission under section 13(1): moratorium, public announcement, IRP appointment.
4Take each act in the facts and test it against section 14(1)(a) to (d).
5Check the exceptions: sections 14(2), 14(2A), the licence Explanation and section 14(3), including the surety carve-out.
6Check the timing: has the moratorium ended by plan approval under section 31(1) or a liquidation order under section 33?
7Write a clear conclusion and state what the IRP or RP must do, such as announce, continue critical supplies or protect assets.

Quickest way: Date, orders, bar, exception

When to use it: Use it for short-answer or case questions where you must decide quickly whether an act is allowed during CIRP.

Mark the admission date. Everything runs from there.
Recall the trio: moratorium, announcement, IRP.
Match the act to the four barred limbs of section 14(1).
Ask if it is a surety, a notified transaction, an essential or critical supply, or a protected licence.
Check whether the moratorium has already ended.

Common mistakes in Commencement of CIRP and Moratorium Consequences

Treating the filing date or demand notice date as the CIRP start.
Students link the process to the creditor's actions.
Fix: Write that CIRP commences on the date of admission by the Adjudicating Authority (section 9(6) for section 9 cases).
Saying the moratorium stops action against a surety or guarantor of the corporate debtor.
Students assume the moratorium covers everyone connected to the debtor.
Fix: Section 14(3)(b) excludes a surety in a contract of guarantee to the corporate debtor, so the creditor can proceed against the surety.
Forgetting that SARFAESI action is barred.
Students think secured creditors are outside the freeze.
Fix: Section 14(1)(c) bars any action to enforce security interest, including under the SARFAESI Act, 2002.
Saying licences and supplies are protected unconditionally.
Students remember the protection but not its condition.
Fix: Licences are protected only if current dues are paid. Critical supplies can stop if moratorium-period dues are unpaid.
Saying the moratorium lasts till the CIRP ends in all cases.
Students skip the proviso to section 14(4).
Fix: It ceases from the date of plan approval under section 31(1) or a liquidation order under section 33.
Placing the public announcement before the IRP's appointment.
Students memorise the three orders without their sequence.
Fix: Section 13(2): the announcement is made immediately after the IRP is appointed.

Worked examples

Example 1

Sunrise Textiles Ltd received a demand notice from its operational creditor on 2 March. The creditor filed a section 9 application on 20 March. The NCLT admitted it on 5 April. State the date CIRP commences and the orders the NCLT must pass on admission.

Show the solution

Provision: section 9(6) says CIRP commences from the date of admission of the application under section 9(5).
Facts: notice on 2 March and filing on 20 March are earlier steps. Admission was on 5 April.
Conclusion on date: CIRP commences on 5 April.
Orders under section 13(1): declare a moratorium under section 14, cause a public announcement and call for claims under section 15, and appoint an IRP under section 16.
Sequence: the public announcement is made immediately after the IRP is appointed (section 13(2)).
Timeline: the announcement must state the CIRP closes on the 180th day from 5 April (section 15(1)(f)).

Answer: CIRP commences on 5 April, the date of admission. The NCLT must declare a moratorium, order a public announcement and appoint an IRP, with the announcement made immediately after the appointment.

Example 2

After admission of a CIRP against Kaveri Engineering Ltd, (a) a bank begins SARFAESI action on the company's factory, (b) the bank also sues the director who gave a personal guarantee for the company's loan, and (c) an electricity board threatens to disconnect supply, which the RP considers critical, for non-payment of dues from before the CIRP. Advise.

Show the solution

Part (a): section 14(1)(c) bars action to enforce security interest, including under the SARFAESI Act, 2002. The action is barred during the moratorium.
Part (b): section 14(3)(b) says the moratorium does not apply to a surety in a contract of guarantee to the corporate debtor. The bank can proceed against the guarantor.
Part (c): section 14(2A) protects supplies the RP considers critical to preserve value and run the company as a going concern.
The exception in section 14(2A) applies only where dues arising from the supply during the moratorium are unpaid. The dues here are from before the CIRP.
Conclusion: the supply cannot be terminated on that ground, provided the company pays dues arising during the moratorium.

Answer: (a) The SARFAESI action is barred. (b) The suit against the guarantor is not barred. (c) Supply cannot be disconnected for pre-CIRP dues, but moratorium-period dues must be paid to keep protection.

Exam tips

Open every case answer by fixing the commencement date as the date of admission, then the three orders under section 13(1).
Learn the four limbs of section 14(1) as a list and cite the clause letter when applying.
Always mention the surety exception in section 14(3)(b) when the facts include a guarantor.
Mention that the moratorium ends on plan approval under section 31(1) or a liquidation order under section 33.
For pre-pack questions, state that section 54E applies section 14 mutatis mutandis from the pre-pack commencement date.

Practice questions from Application for Corporate Insolvency Resolution Process

Commencement of CIRP and Moratorium Consequences: frequently asked questions

When does CIRP commence under section 9?

It commences from the date the Adjudicating Authority admits the application under section 9(5). Filing and the demand notice do not start it.

What does the moratorium under section 14 prohibit?

It bars suits and execution of decrees against the corporate debtor, transfer or disposal of its assets, enforcement of security interest including under SARFAESI, and recovery of property by an owner or lessor from the debtor.

Does the moratorium protect guarantors of the corporate debtor?

No. Section 14(3)(b) says the moratorium does not apply to a surety in a contract of guarantee to the corporate debtor.

When does the moratorium end?

It runs till the CIRP is completed. If the Adjudicating Authority approves a plan under section 31(1) or orders liquidation under section 33, it ceases from that date.

What must the public announcement contain?

Section 15(1) requires the debtor's name and address, the authority of its registration, the last date for claims, the IRP's details, penalties for false claims, and the CIRP closing date, the 180th day from admission.