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CS Professional · Insolvency and Bankruptcy - Law and Practice

Corporate Insolvency Resolution Process: CS Professional Chapter Guide

The Corporate Insolvency Resolution Process (CIRP) is the time-bound process under the Insolvency and Bankruptcy Code, 2016 to rescue a defaulting corporate debtor. After admission, a moratorium starts, an IRP takes charge, creditors form a committee, and a resolution plan is approved or the company goes into liquidation. You answer cases by applying each stage to the facts.

What this chapter covers

This chapter covers the whole life of a corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. It begins with how the process starts, then moves through the moratorium, public announcement, the interim resolution professional, the committee of creditors, and the resolution plan. It ends with two special routes: the fast track process and the pre-packaged insolvency resolution process.

The chapter is a chain. Each stage triggers the next. On admission, the Adjudicating Authority declares a moratorium, causes a public announcement and appoints an interim resolution professional (Section 13). The professional then runs the company, collects claims and helps form the committee of creditors. The committee decides on the resolution plan. Once you see this chain, the details are easier to remember.

This chapter is the base for the rest of the paper. Liquidation, avoidance transactions, the role of insolvency professionals and the other processes all assume you know how CIRP works. The fast track and pre-pack routes are best learnt as variations of the normal CIRP, so compare them with it for time limits, eligibility, voting thresholds and who triggers them.

This is the core chapter of the paper. Your answers are written and case-based, so examiners test whether you can apply a stage to facts: who can apply, what the Adjudicating Authority must do, what the vote threshold is, and what happens next. The chapter has many numbers and sequences, such as 66% votes, 90-day periods and eligibility conditions, and each is a clean source of marks if you state it exactly. A student who knows the sequence can also handle questions on later chapters with confidence.

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

  1. 1Initiation of Corporate Insolvency Resolution ProcessStart here because everything else follows admission of the application and you need to know who can apply and on what ground.
  2. 2Moratorium and Public AnnouncementThis is the first thing that happens on admission, so learn it right after initiation.
  3. 3Interim Resolution Professional and Committee of CreditorsThese are the people who run the process after the moratorium, so learn their roles before the plan.
  4. 4Resolution Plan: Preparation, Approval and ImplementationThis is the outcome of the process and the heaviest topic, so study it once the actors are clear.
  5. 5Fast Track Corporate Insolvency Resolution ProcessIt is a shortened version of normal CIRP, so it is easy to learn once the standard process is clear.
  6. 6Pre-Packaged Insolvency Resolution ProcessStudy it last because it has its own eligibility conditions and links back to CIRP, including conversion into it.

How to prepare Corporate Insolvency Resolution Process

Treat this chapter as a timeline with rules attached to each stage. Read the Code sections in plain words, then practise applying them to short fact patterns.

  1. Draw a one-page flowchart of normal CIRP from application to admission, moratorium, announcement, IRP, CoC, plan and approval. Keep it as your base map.
  2. Read each section of the Code once and rewrite it in your own words. Note every number, time limit and vote threshold in a separate list.
  3. Learn the three special routes side by side. Compare normal CIRP, fast track and pre-pack on who is eligible, time limit, who starts it and the vote needed.
  4. For fast track, learn that it is for corporate debtors notified by the Central Government and that it must be completed within ninety days, with one extension of up to forty-five days.
  5. For pre-pack, learn the eligibility conditions in Section 54A one by one, including the three-year bar, the declaration by directors, the special resolution and the 66% approval of unrelated financial creditors.
  6. Practise case questions in the order: provision, analysis of facts, conclusion. Write short answers within time and name the section only when you are sure of it.
  7. Revise the numbers and sequences every few days until you can recite them without notes.

Common mistakes in Corporate Insolvency Resolution Process

  • Mixing up the vote thresholds of 66% and 75%.

    Fix: Make a table in your notes: 66% for pre-pack approvals and CoC resolving to start CIRP from a pre-pack, 75% for extending fast track. Revise it daily.

  • Treating fast track and pre-pack as the same kind of process.

    Fix: Remember that fast track is for notified classes of debtors and is time-limited to ninety days, while pre-pack is for MSMEs and other debtors meeting stated conditions, and needs a base plan agreed in advance.

  • Skipping the sequence of events on admission.

    Fix: Learn the three steps together: moratorium, public announcement, appointment of the IRP. Remember that the announcement follows the IRP's appointment.

  • Writing only the law and not applying it to the facts.

    Fix: Use provision, analysis, conclusion. Pick the facts that matter, test each against the condition and then state the result.

  • Missing the conditions that bar a debtor from pre-pack.

    Fix: List them as a checklist: no pre-pack or completed CIRP in three years, not in CIRP, no liquidation order, eligible under Section 29A, creditor approval, director declaration, member resolution.

  • Quoting section numbers from memory when unsure.

    Fix: Cite a section only when you are certain. A correct rule in plain words earns more than a wrong number.

Last-day revision: Corporate Insolvency Resolution Process

  • After admission under Section 7, 9 or 10, the Adjudicating Authority declares a moratorium, causes a public announcement and appoints an IRP (Section 13).
  • The public announcement is made immediately after the IRP is appointed.
  • In a pre-pack, the moratorium runs from the order until the pre-pack period ends (Section 54E).
  • Pre-pack is open to MSME corporate debtors, and to others who meet the stated conditions of Section 54A(2).
  • A corporate debtor cannot use pre-pack if it went through pre-pack or completed CIRP in the preceding three years.
  • Pre-pack needs approval of unrelated financial creditors holding at least 66% in value of financial debt, plus a special resolution of members.
  • The directors' declaration must state that the application will be filed within a definite period not exceeding ninety days.
  • The CoC can resolve to start CIRP during a pre-pack by at least 66% of voting shares (Section 54-O).
  • Fast track CIRP must finish within ninety days; extension needs 75% CoC vote and AA approval, up to forty-five days, only once (Section 56).
  • Fast track applies to debtors notified by the Central Government on assets, income, class of creditors or debt (Section 55).
  • A fast track application needs proof of default from an information utility or other specified means (Section 57).
  • Pre-pack costs become part of CIRP costs if the process converts to CIRP.

Corporate Insolvency Resolution Process practice questions

Corporate Insolvency Resolution Process in other exams

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

Corporate Insolvency Resolution Process: frequently asked questions

What is the order of events when a CIRP application is admitted?

On admission, the Adjudicating Authority declares a moratorium, causes a public announcement and appoints an interim resolution professional. The announcement is made immediately after the IRP is appointed. This sequence is stated in Section 13.

How long does a fast track CIRP last?

It must be completed within ninety days from the insolvency commencement date. The resolution professional can seek an extension if the CoC resolves with 75% of the voting share. The Adjudicating Authority may extend by not more than forty-five days, and only once.

Who can use the pre-packaged insolvency resolution process?

A corporate debtor classified as a micro, small or medium enterprise can apply. Other corporate debtors that have defaulted can also apply if they meet the conditions in Section 54A(2). These include creditor approval, a directors' declaration and a special resolution of members.

Can a pre-pack be converted into a normal CIRP?

Yes. The committee of creditors can resolve with at least 66% of voting shares to start CIRP if the debtor is eligible. The Adjudicating Authority then terminates the pre-pack and starts CIRP, and the pre-pack costs form part of the CIRP costs.

How should I prepare this chapter for a written, case-based paper?

Learn the process as a timeline, then practise applying each stage to short facts. Write provision, analysis and conclusion in each answer. Keep a short list of time limits and vote thresholds for quick recall.