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Insolvency and Bankruptcy - Law and Practice · Bankruptcy for Individuals and Partnership Firms

Insolvency Resolution Process for Individuals under the IBC

Updated 11 October 2026 · Fact-checked

The insolvency resolution process for individuals is a Part III route where a debtor proposes a repayment plan to creditors. A resolution professional examines the plan and reports to the Adjudicating Authority (the Debt Recovery Tribunal). Creditors vote, and a plan needs approval by more than three-fourth in value. The professional then supervises implementation.

Understand Insolvency Resolution Process for Individuals

Part III of the IBC deals with individuals and partnership firms. Section 78 says this Part applies where the amount of default is not less than ₹1,000. The Central Government may notify a higher minimum, but not more than ₹1 lakh.

The insolvency resolution process is a rescue route. The debtor does not give up everything. Instead, the debtor offers creditors a repayment plan and tries to settle debts under it. Compare this with bankruptcy, which is about selling the estate, and with the fresh start, which is a quick relief for very small debtors.

The Adjudicating Authority for individuals and firms is the Debt Recovery Tribunal (DRT) having territorial jurisdiction over the place where the debtor resides, carries on business or works for gain (section 179). The DRT can also decide suits, claims and questions of priority arising out of the insolvency. Under section 179(3), the period of any moratorium is excluded when computing limitation for a suit or application in the name of the debtor.

The flow is: application, appointment of a resolution professional, moratorium, repayment plan, report of the professional, creditors' meeting, approval by vote, then implementation and completion. Your answer should follow this order and name who acts at each stage.

The difference from the fresh start is important. A fresh start application under section 80 is filed by the debtor, and an interim moratorium runs from filing until admission or rejection (section 81). It requires a list of debts, security, family financial information for two years and an affidavit. The resolution process instead ends in a creditor-approved repayment plan.

Key rules to remember

Applicability (section 78)
Default ≥ ₹1,000 (Central Government may notify a higher minimum, not more than ₹1,00,000)
Applies to individuals and partnership firms under Part III.
Adjudicating Authority (section 179)
Debt Recovery Tribunal with territorial jurisdiction
Place where the debtor resides, carries on business or personally works for gain.
Report of resolution professional (section 106(1))
Within 21 days from the last date of submission of claims under section 102
Plan under section 105 is submitted with the report to the Adjudicating Authority.
Contents of the report (section 106(2))
Plan complies with law; reasonable prospect of approval and implementation; need for a creditors' meeting
If no meeting is recommended, reasons must be given.
Date of creditors' meeting (section 106(4))
Not less than 14 days and not more than 28 days from submission of the report
Professional must consider convenience of creditors for date and venue.
Approval of repayment plan (section 111)
More than three-fourth in value of creditors present in person or by proxy and voting
Counted on those present and voting, not all creditors. Applies to modifications too.
Report of the meeting (section 112)
Approved or rejected, modifications, resolutions and decisions, creditors present, voting records
Prepared by the resolution professional.
Supervision (section 116)
Resolution professional supervises implementation; may apply to Adjudicating Authority for directions
Authority may issue directions on that application.
Completion (section 117)
Notice and report within 14 days of completion; extension up to 7 days on application
Sent to persons bound by the plan and the Adjudicating Authority. Report summarises receipts and payments and extent of implementation.

How to solve Insolvency Resolution Process for Individuals questions

Use the process order. Identify the stage the facts have reached, apply the rule with its time limit or majority, then conclude.

  1. 1Check applicability: is it an individual or partnership firm, and is the default at least ₹1,000 (or the notified higher amount, up to ₹1 lakh)?
  2. 2Identify the forum: the DRT with territorial jurisdiction over where the debtor resides, does business or works for gain.
  3. 3Locate the stage: application, interim moratorium, claims, repayment plan, report, meeting, vote or implementation.
  4. 4Apply the time limit: 21 days for the report, 14 to 28 days for the meeting, 14 days for the completion notice.
  5. 5Apply the vote rule: more than three-fourth in value of creditors present and voting, on the plan or any modification.
  6. 6State who acts: the resolution professional prepares reports and supervises; the Adjudicating Authority gives directions.
  7. 7Conclude clearly: valid or invalid, approved or rejected, with the section number only where certain.

Quickest way: Stage, rule, number

When to use it: Use for short-answer questions and for case facts that test a single time limit or majority.

  1. Write the stage name in one line.
  2. Write the rule and its number: 21 days, 14 to 28 days, more than 3/4, 14 days plus 7.
  3. Apply the number to the facts by simple arithmetic.
  4. Write a one-line conclusion.

Common mistakes in Insolvency Resolution Process for Individuals

  • Treating the majority as three-fourth of all creditors.

    Students remember the fraction but not its base.

    Fix: Write: more than three-fourth in value of creditors present in person or by proxy and voting.

  • Saying three-fourth or at least 75%.

    Mixing it with the corporate rule or loose wording.

    Fix: Section 111 says more than three-fourth, so exactly 75% does not pass.

  • Naming the NCLT as the authority for individuals.

    Corporate process is studied first.

    Fix: For individuals and firms under Part III, the Adjudicating Authority is the DRT (section 179).

  • Mixing fresh start with the resolution process.

    Both begin with a debtor application and an interim moratorium.

    Fix: Fresh start (section 80 application) gives relief for qualifying debts; the resolution process ends in a creditor-approved repayment plan.

  • Confusing the 21-day and 14 to 28 day periods.

    Both relate to the report.

    Fix: 21 days is for submitting the plan and report from the last date of claims. The meeting is fixed 14 to 28 days after the report.

  • Forgetting the completion notice and report.

    Answers stop at the vote.

    Fix: Add that the professional supervises implementation and sends the notice and receipts-and-payments report within 14 days of completion.

Worked examples

Example 1

The resolution professional submits the repayment plan and report on 1 March. Within what dates must the creditors' meeting be held, if she recommends a meeting? Her report was due after claims closed on 8 February; was the submission in time?

Show the solution
  1. The report is due within 21 days from the last date of submission of claims (section 106(1)).
  2. 21 days from 8 February: February has 28 days in a non-leap year, so 8 February plus 21 days is 1 March.
  3. Submission on 1 March is therefore on the last permissible day and is in time (assuming a non-leap year).
  4. The meeting date must be not less than 14 days and not more than 28 days from the date of submission.
  5. 14 days after 1 March is 15 March; 28 days after is 29 March.

Answer: The submission is in time. The meeting should be held between 15 March and 29 March, with the venue convenient for creditors.

Example 2

At a creditors' meeting on a repayment plan, creditors present and voting hold debts of ₹80 lakh in value. Creditors holding ₹60 lakh vote for the plan and ₹20 lakh against. Other creditors with ₹40 lakh did not attend. Is the plan approved?

Show the solution
  1. The test is more than three-fourth in value of creditors present and voting (section 111).
  2. Value present and voting is ₹80 lakh. Absent creditors are ignored.
  3. Three-fourth of ₹80 lakh is ₹60 lakh.
  4. Votes in favour are exactly ₹60 lakh, which is not more than ₹60 lakh.
  5. The plan therefore fails the majority test.

Answer: The plan is not approved, because exactly three-fourth is not more than three-fourth. The resolution professional records the rejection and voting details in the report of the meeting (section 112).

Exam tips

  • Write the stage sequence first; marks go for correct order.
  • Memorise the numbers: 21 days, 14 to 28 days, more than three-fourth in value, 14 days plus 7.
  • State the DRT as the authority and mention its territorial jurisdiction.
  • In case questions, always compute the majority on creditors present and voting.
  • Add one line contrasting the fresh start when the question asks about differences.

Practice questions from Bankruptcy for Individuals and Partnership Firms

Insolvency Resolution Process for Individuals in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Insolvency Resolution Process for Individuals: frequently asked questions

What is the minimum default for Part III of the IBC?

Section 78 applies Part III where the default is not less than ₹1,000. The Central Government may notify a higher minimum, which cannot exceed ₹1 lakh.

Which authority hears individual insolvency matters?

The Debt Recovery Tribunal having territorial jurisdiction is the Adjudicating Authority for individuals and firms (section 179). It looks at where the debtor resides, does business or works for gain.

What majority approves a repayment plan?

Section 111 requires more than three-fourth in value of creditors present in person or by proxy and voting. The same applies to modifications of the plan.

Who supervises the repayment plan after approval?

The resolution professional supervises implementation (section 116). If needed, they can ask the Adjudicating Authority for directions on a particular matter.

How is this different from the fresh start process?

Fresh start is a debtor application with an interim moratorium until admission or rejection, aimed at relief for qualifying debts. The insolvency resolution process centres on a repayment plan that creditors vote on.