Insolvency and Bankruptcy - Law and Practice · Corporate Insolvency Resolution Process

Initiation of Corporate Insolvency Resolution Process under IBC

Updated 11 October 2026 · Fact-checked

Under Section 6 of the IBC, when a corporate debtor commits a default, a financial creditor (Section 7), an operational creditor (Section 9) or the corporate debtor itself through a corporate applicant (Section 10) may apply to the Adjudicating Authority. CIRP starts from the date the application is admitted.

Understand Initiation of Corporate Insolvency Resolution Process

A corporate insolvency resolution process (CIRP) does not start on its own. Someone with the right to do so must file an application before the Adjudicating Authority, which is the NCLT. Section 6 gives that right to three players, and only when a default has occurred: a financial creditor, an operational creditor, or the corporate debtor itself.

Each route has its own section and its own conditions. A financial creditor files under Section 7 and proves default mainly through the record of an information utility or other specified evidence. An operational creditor files under Section 9, but only after first sending a demand notice or invoice under Section 8 and waiting ten days. The corporate debtor files under Section 10 through a corporate applicant, with shareholder or partner approval.

The Adjudicating Authority then checks the application. Under Sections 9, 10 and 54C it must pass an order within fourteen days of receiving the application. Under Section 7(4) it must ascertain the existence of default within fourteen days. If it has not ascertained default and passed its order in that time, it must record its reasons in writing.

Before rejecting an application, the Adjudicating Authority must give the applicant notice to rectify the defect within seven days of receiving that notice. The scope of this notice differs by section:

Section 7(5): the proviso covers every clause (b) ground for rejection. These are that default has not occurred, that the application is incomplete, or that a disciplinary proceeding is pending against the proposed resolution professional.
Section 10(4) and Section 54C(4): the proviso requires notice before rejecting the application generally.
Section 9(5): the proviso requires notice only before rejection for an incomplete application, under clause (ii)(a). A dispute or payment ground cannot be cured by notice.

The process commences only from the date of admission, not from the date of filing.

The main exam point is to match the facts to the right route and test each condition. Ask who the applicant is, whether a default exists, whether the application is complete, whether a dispute exists (operational creditor only), and whether any disciplinary proceeding is pending against the proposed resolution professional.

A related route, the pre-packaged process under Section 54C, is also initiated by a corporate applicant. It needs extra documents such as the approval of financial creditors and the proposed resolution professional's report. It is a separate process from regular CIRP.

Key rules to remember

Who may initiate (Section 6): Default by corporate debtor → financial creditor OR operational creditor OR corporate debtor may initiate CIRP; Default is the trigger for all three routes.
Financial creditor (Section 7): Application on default + record of default (information utility or other specified evidence) + name of proposed IRP; Default includes default on financial debt owed to any other financial creditor, not only the applicant.
Threshold for specified financial creditors (Section 7, provisos): Not less than 100 creditors or 10% of the class, whichever is less; Applies to creditors in a class under Section 21(6A)(a) and (b), and to allottees of the same real estate project.
Operational creditor (Section 9): Demand notice/invoice (Section 8) → wait 10 days from delivery → no payment and no notice of dispute → file; Must attach the invoice or notice and an affidavit that no dispute notice has been received.
Corporate applicant (Section 10): Default + application + books of account + proposed IRP + special resolution of shareholders (or resolution of at least three-fourths of partners); Admit if complete and no disciplinary proceeding is pending against the proposed RP.
Time limit for the Adjudicating Authority: Sections 9(5), 10(4) and 54C(4): order within 14 days of receipt. Section 7(4): ascertain default within 14 days; Under Section 7(4), if the AA has not ascertained default and passed its order in that time, it must record its reasons in writing.
Notice to rectify defects: Before rejecting, AA gives notice; applicant has 7 days from receipt of the notice to rectify; Section 7(5): before rejection on any clause (b) ground (default not occurred, incomplete, or pending disciplinary proceeding). Sections 10(4) and 54C(4): before rejecting the application. Section 9: only before rejection for an incomplete application, clause (ii)(a); dispute or payment grounds are not curable by notice.
Communication of order (Section 7(7)): AA communicates the order within 7 days of admission or rejection; Admission is communicated to the financial creditor and the corporate debtor. Rejection is communicated to the financial creditor.
Commencement: CIRP commences from the date of admission; Sections 7(6), 9(6) and 10(5).

How to solve Initiation of Corporate Insolvency Resolution Process questions

Use this sequence for any case-based question on initiation of CIRP. It follows provision, analysis, conclusion.

1Identify the applicant: financial creditor, operational creditor or corporate applicant. This fixes the section: 7, 9 or 10.
2State Section 6 first: a default by the corporate debtor must have occurred.
3List the conditions for that route. For Section 9, check the demand notice, the ten-day wait, and absence of payment and dispute.
4Check the documents: record of default, invoice or notice, affidavit, books of account, special resolution, name of proposed IRP.
5Check the application is complete and no disciplinary proceeding is pending against the proposed resolution professional.
6Apply the Adjudicating Authority's powers: under Sections 9 and 10, admit or reject by order within fourteen days. Under Section 7, ascertain default within fourteen days and record reasons in writing if the order is later. Before rejecting, it must give seven days to rectify the defect: under Section 7 on any clause (b) ground, under Section 10 generally, and under Section 9 only for an incomplete application.
7Conclude with the date CIRP commences, which is the date of admission, and add the communication step where relevant.

Quickest way: Applicant-Condition-Outcome check

When to use it: Use when a short fact pattern asks whether an application will be admitted.

Write the applicant and the section number.
Tick the trigger: default, plus a demand notice and ten days for an operational creditor.
Look for the single fact that breaks the rule: a dispute, incomplete papers, no resolution, a pending disciplinary proceeding.
If a defect is curable, say the AA must give seven days notice before rejecting.
Write the conclusion in one line and state CIRP commences on admission.

Common mistakes in Initiation of Corporate Insolvency Resolution Process

Letting an operational creditor file directly without a demand notice.
Students copy the Section 7 logic to Section 9.
Fix: Remember Section 9(1): a Section 8 notice or invoice, then ten days from delivery, then file.
Admitting a Section 9 application despite a pre-existing dispute.
Students focus on non-payment only.
Fix: Under Section 9(5)(ii)(d), a notice of dispute received or a record of dispute in the information utility means rejection.
Saying CIRP starts on the date of filing.
Filing feels like the start.
Fix: Quote Sections 7(6), 9(6) and 10(5): commencement is from the date of admission.
Forgetting the seven-day notice to rectify defects before rejecting an application, or applying it the same way under every section.
Students jump from defective to rejected, or assume the notice works identically under Sections 7, 9 and 10.
Fix: Add that the AA must first give notice to rectify the defect within seven days of receipt. Under Section 7(5) it precedes rejection on any clause (b) ground. Under Sections 10(4) and 54C(4) it precedes rejection of the application. Under Section 9 it applies only to an incomplete application; a dispute or payment ground is not curable by notice.
Ignoring the special resolution requirement under Section 10.
Students treat the corporate applicant as acting on board approval alone.
Fix: State that Section 10(3)(c) requires a special resolution of shareholders, or a resolution of at least three-fourths of partners.
Omitting the pending disciplinary proceeding ground.
It is a small clause that is easy to overlook.
Fix: Mention it in every route: pending disciplinary proceedings against the proposed RP justify rejection.

Worked examples

Example 1

Sunrise Textiles Ltd supplied goods worth ₹40,00,000 to Apex Fabrics Ltd and was not paid. Sunrise delivered a demand notice on 1 March. On 8 March Sunrise filed a Section 9 application. Apex had sent no dispute notice. Advise whether the application is maintainable.

Show the solution

Provision: under Section 9(1), the operational creditor may file only after the expiry of ten days from the date of delivery of the demand notice or invoice under Section 8(1), if it receives neither payment nor a notice of dispute.
Analysis: the notice was delivered on 1 March. The ten days from 1 March expire on 11 March, so filing is permitted only after 11 March. The application filed on 8 March is premature.
The fact that no dispute notice exists does not cure this. Section 9(1) makes the expiry of the ten days a condition for filing.
Section 9(5)(ii) lists specific grounds for rejection, and premature filing is not among them. So do not attribute the rejection to a ground in Section 9(5)(ii). The AA would reject the application as not complying with Section 9(1).
Practical point: Sunrise may refile after the ten days expire, if Apex still neither pays nor disputes.

Answer: The application is premature and not maintainable, because it does not comply with Section 9(1). Sunrise should wait until the ten days from delivery of the notice have expired (that is, file after 11 March) and refile if Apex neither pays nor raises a dispute.

Exam tips

Always write the section number with the route: Section 7, 9 or 10. Examiners look for the correct pairing.
In Section 9 problems, check dates carefully and count the ten-day period from delivery of the notice.
Use the three-part answer format: provision, analysis of the facts, conclusion.
Keep the time limits separate. Sections 9, 10 and 54C require an order within fourteen days. Under Section 7 the AA ascertains default within fourteen days and records reasons if it is late. The seven-day rectification notice comes before rejection: under Section 7 on any clause (b) ground, under Sections 10 and 54C generally, and under Section 9 only for an incomplete application.
For a Section 10 question, check whether the special resolution or three-fourths partner resolution is attached.

Practice questions from Corporate Insolvency Resolution Process

Initiation of 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.

CMA FinalCorporate Insolvency Resolution Process under IBC

Initiation of Corporate Insolvency Resolution Process: frequently asked questions

Who can initiate CIRP under the IBC?

Under Section 6, a financial creditor, an operational creditor or the corporate debtor itself can initiate CIRP when the corporate debtor commits a default. Each uses a different section: 7, 9 or 10.

What is the difference between a Section 7 and a Section 9 application?

Section 7 is filed by a financial creditor on proof of default, usually from an information utility record. Section 9 is filed by an operational creditor after a demand notice and a ten-day wait, with an affidavit that no dispute has been raised.

Does CIRP begin when the application is filed?

No. CIRP commences from the date the Adjudicating Authority admits the application. This is stated in Sections 7(6), 9(6) and 10(5).

What happens if the application has a defect?

Before rejecting it, the Adjudicating Authority must give the applicant notice to rectify the defect within seven days of receiving that notice. Under Section 7 this covers every clause (b) ground, and under Sections 10 and 54C it precedes rejection of the application. Under Section 9 the notice is required only for an incomplete application, and it does not cure a dispute or payment ground.