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

Application for Bankruptcy by Debtor under the IBC

Updated 11 October 2026 · Fact-checked

Under Section 121 of the IBC, a debtor can apply for bankruptcy to the Debt Recovery Tribunal only after an earlier order in the insolvency resolution process, and within three months of that order. Section 122 requires the process records, a statement of affairs and a copy of the order. Section 124 gives an interim moratorium.

Understand Application for Bankruptcy by Debtor

Bankruptcy for individuals and partnership firms comes after an insolvency resolution process (IRP) has failed or has not led to a plan. It is not a first step. A debtor cannot walk in and ask for bankruptcy at the start. The Code opens the door only in three situations listed in Section 121(1).

Those situations are: (a) an order under Section 100(4), (b) an order under Section 115(2), or (c) an order under Section 118(3). Each is an order of the Adjudicating Authority made in the earlier insolvency resolution process. You must tie every bankruptcy application to one of these orders.

Section 121(1) says the application can be made by a creditor, alone or jointly with other creditors, or by a debtor. This page deals with the debtor's own application. Where the debtor is a firm, Section 121(3) lets any of its partners file it. The Adjudicating Authority is the Debt Recovery Tribunal (DRT) with territorial jurisdiction under Section 179(1), as defined in Section 79(1).

Time is tight. Section 121(2) says the application must be filed within three months of the date of the order passed under the sections in Section 121(1). Count from the date of the order.

Section 122 sets out what goes with the debtor's application, and Section 124 gives immediate protection: an interim moratorium starts on the date the application is made. It protects the debtor's property from actions by creditors until the bankruptcy commencement date.

Key rules to remember

Triggers for a bankruptcy application: Section 121(1): order under s.100(4) OR s.115(2) OR s.118(3); The applicant may be a creditor (alone or jointly) or the debtor. The application goes to the Adjudicating Authority.
Time limit: Filing period = 3 months from the date of the order (Section 121(2)); Counted from the date of the Adjudicating Authority's order under the sections in s.121(1).
Firm as debtor: Any partner may file (Section 121(3)); Contrast with Section 94(2), where a partner applying for resolution process needs all or a majority of partners to file jointly.
Documents with debtor's application: Section 122(1): (a) records of IRP + (b) statement of affairs on the date of application + (c) copy of order permitting debtor to apply; Form, manner and fee are prescribed (s.122(3)).
Proposal of trustee: Debtor may propose an insolvency professional as bankruptcy trustee (Section 122(2)); It is a proposal. The trustee is appointed under Section 125.
Withdrawal: No withdrawal without leave of the Adjudicating Authority (Section 122(4)); Applies to the debtor's application.
Interim moratorium: Starts on the date of making the application; ceases on the bankruptcy commencement date (Section 124(1)); Pending actions against the debtor's property for his debts are deemed stayed; creditors cannot start new ones. For a firm, it operates against all partners as on the date of application (s.124(2)).

How to solve Application for Bankruptcy by Debtor questions

Use this order for any problem on a debtor's bankruptcy application. It follows the exam pattern: provision, facts, conclusion.

1Identify who is applying: the debtor, a creditor, or a partner of a firm.
2Check the trigger. Was there an order under Section 100(4), 115(2) or 118(3)? Without one, the application under Section 121 is not available.
3Check the time. Count three months from the date of that order and compare it with the filing date (Section 121(2)).
4Check the forum: the Debt Recovery Tribunal with territorial jurisdiction (Section 179(1)).
5List the contents under Section 122(1): process records, statement of affairs on the date of application, and a copy of the order permitting the debtor to apply. Note what is missing in the facts.
6Note optional and procedural points: proposal of a trustee (s.122(2)), prescribed form and fee (s.122(3)), no withdrawal without leave (s.122(4)).
7State the effect: interim moratorium from the date of application (Section 124), also against all partners if it is a firm.
8Write a one-line conclusion answering the exact question asked.

Quickest way: Trigger, Time, Papers, Protection

When to use it: Use when the question is a short fact pattern asking whether and how a debtor can file, or what happens after filing.

Trigger: name the s.100(4), s.115(2) or s.118(3) order.
Time: three months from that order.
Papers: IRP records, statement of affairs, copy of order.
Protection: interim moratorium from the date of filing till bankruptcy commencement date.
If a firm: any partner may file, and moratorium covers all partners.

Common mistakes in Application for Bankruptcy by Debtor

Saying a debtor can apply for bankruptcy directly without any earlier process.
Students think of bankruptcy as a stand-alone remedy, as in everyday language.
Fix: Always cite the Section 121(1) triggers. The application follows an order in the insolvency resolution process.
Counting the three months from the date of default or the date of the IRP application.
Other timelines in the Code run from default or admission, so students mix them up.
Fix: Section 121(2) counts from the date of the Adjudicating Authority's order under the sections in Section 121(1).
Writing that the NCLT hears the application.
The NCLT is the forum for corporate persons.
Fix: For individuals and firms the Adjudicating Authority is the Debt Recovery Tribunal (Sections 79(1) and 179(1)).
Treating the statement of affairs as dated at the time of the IRP.
Students skim the text and assume the earlier statement can be reused.
Fix: Section 122(1)(b) requires the statement of affairs on the date of the application for bankruptcy.
Applying the joint-filing rule of Section 94(2) to bankruptcy of a firm.
Both sections deal with partners, so the rules get blended.
Fix: Under Section 121(3), any partner may file the bankruptcy application. Section 94(2) is for the resolution process application only.
Saying the interim moratorium begins when the bankruptcy order is passed.
Confusion with the bankruptcy commencement date.
Fix: It begins on the date of making the application and ceases on the bankruptcy commencement date (Section 124(1)(a)).

Worked examples

Example 1

The Adjudicating Authority passed an order under Section 118(3) in the insolvency resolution process of Ramesh Iyer, a trader in Coimbatore, on 10 March. He files an application for bankruptcy on 25 June of the same year, with the records of the process and a copy of the order permitting him to apply. He has not filed any statement of affairs. Advise.

Show the solution

Provision: Section 121(1)(c) allows a bankruptcy application after an order under Section 118(3). The trigger is met.
Time: Section 121(2) gives three months from the date of the order. Three months from 10 March ends on 10 June. Filing on 25 June is late.
Contents: Section 122(1)(b) requires a statement of affairs on the date of application. It is missing, so the application is also incomplete.
Conclusion: the application is out of time and incomplete.

Answer: The application is filed after the three-month period under Section 121(2) and lacks the statement of affairs required by Section 122(1)(b). It is not in order as filed.

Example 2

Mehta & Sons is a partnership firm. After an order under Section 115(2) in its insolvency resolution process, one partner, Nisha, wishes to file a bankruptcy application without the other partners joining. The other partners are not cooperating. Can she file, and what is the effect of filing?

Show the solution

Provision: Section 121(1)(b) permits a bankruptcy application after an order under Section 115(2).
Who can file: Section 121(3) says where the debtor is a firm, the application may be filed by any of its partners. Joint filing is not required.
Forum and time: the Debt Recovery Tribunal with territorial jurisdiction, within three months of the order.
Documents: process records, statement of affairs on the date of application, and a copy of the order permitting the debtor to apply (Section 122(1)). She may propose an insolvency professional as trustee.
Effect: under Section 124(1) an interim moratorium starts on the date of the application. Under Section 124(2), for a firm it operates against all partners as on that date.

Answer: Yes. Nisha can file alone under Section 121(3), within three months of the order, with the Section 122(1) documents. An interim moratorium starts on filing and binds actions against all the partners until the bankruptcy commencement date.

Exam tips

Begin every answer with the Section 121(1) trigger. Examiners reward the link to the earlier order.
Write the three-month limit and say it runs from the order. Many students lose the mark by omitting the starting point.
List the three Section 122(1) documents as a numbered list. It is easy marks.
For firms, mention both Section 121(3) (any partner may file) and Section 124(2) (moratorium against all partners).
Name the Debt Recovery Tribunal as the forum, and give Section 179 if you are sure of it. Do not write NCLT.

Practice questions from Bankruptcy Order for Individuals and Partnership Firms

Application for Bankruptcy by Debtor: frequently asked questions

Who can apply for a bankruptcy order under Section 121?

A creditor, alone or jointly with other creditors, or the debtor. It must follow an order of the Adjudicating Authority under Section 100(4), 115(2) or 118(3). If the debtor is a firm, any partner can file.

What documents must a debtor attach under Section 122?

The records of the insolvency resolution process, the statement of affairs on the date of the application, and a copy of the order permitting the debtor to apply for bankruptcy. The application must also be in the prescribed form with the prescribed fee.

Can a debtor withdraw a bankruptcy application?

Not freely. Section 122(4) says the debtor's application cannot be withdrawn without the leave of the Adjudicating Authority.

When does the interim moratorium start and end?

It starts on the date of making the application under Section 122 or 123. It ceases on the bankruptcy commencement date, which is the date of the bankruptcy order. During it, pending actions against the debtor's property for his debts are deemed stayed and creditors cannot start new ones.