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

Moratorium and Public Announcement under IBC

Updated 11 October 2026 · Fact-checked

Moratorium under Section 14 IBC is a court-ordered freeze that starts on the insolvency commencement date. It bars suits, asset transfers, security enforcement and recovery of property from the corporate debtor. The public announcement then invites creditors to submit claims. Answer by stating the provision, applying it to the facts, and concluding.

Understand Moratorium and Public Announcement

When the Adjudicating Authority admits an application under section 7, 9 or 10, it must pass an order under section 13. That order does three things: it declares a moratorium, causes a public announcement inviting claims, and appoints an interim resolution professional (IRP).

The moratorium protects the company while the resolution process runs. Creditors cannot race to recover dues, and the company cannot sell off its assets. This keeps the business together as a going concern so a resolution plan can be found.

Under section 14(1), the moratorium prohibits four things: (a) suits, pending proceedings and execution of judgments, decrees or orders against the corporate debtor, in any court, tribunal, arbitration panel or other authority; (b) transfer, encumbrance, alienation or disposal of its assets or any legal right or beneficial interest in them; (c) action to foreclose, recover or enforce security interest, including under the SARFAESI Act, 2002; and (d) recovery of property by an owner or lessor where the corporate debtor occupies or possesses it.

Certain things stay protected. A licence, permit, registration, quota, concession, clearance or similar grant from the government, a local authority or a sectoral regulator cannot be suspended or terminated on the ground of insolvency, provided current dues for its use during the moratorium are paid. Supply of essential goods or services, as specified, cannot be stopped. Critical supplies, as determined by the IRP or RP, also continue unless dues arising during the moratorium are unpaid.

The public announcement is made immediately after the IRP is appointed. Under section 15 it must state the corporate debtor's name and address, the authority of incorporation or registration, the last date for claims, the IRP's details, penalties for false or misleading claims, and the closing date of the process, which is the 180th day from admission. The manner of announcement is as specified by the regulations.

Key rules to remember

Order on admission (section 13): Admission → moratorium + public announcement + appointment of IRP; All three follow from the same order of the Adjudicating Authority.
Prohibited acts (section 14(1)): (a) suits and execution; (b) transfer of assets; (c) enforcement of security; (d) recovery of property by owner or lessor; Learn the four limbs in order; use them as headings in your answer.
Exceptions (section 14(3)): Section 14(1) does not apply to (a) notified transactions, agreements or arrangements; (b) a surety in a contract of guarantee to the corporate debtor; Notification is by the Central Government in consultation with a financial sector regulator or other authority.
Continuing supplies (section 14(2) and (2A)): Essential goods or services as specified: no termination. Critical supplies per IRP or RP: no termination unless moratorium-period dues unpaid; Licences and similar grants are protected only if current dues are paid.
Duration (section 14(4)): From date of order till completion of CIRP; ceases on approval of plan under section 31(1) or liquidation order under section 33; It ends from the date of that approval or order.
Content of public announcement (section 15(1)): Name and address; registering authority; last date for claims; IRP details; penalties for false claims; closing date = 180th day from admission; Section 15(2): made in the manner specified.
Pre-pack moratorium (section 54E): Moratorium under section 14(1) read with 14(3), applying mutatis mutandis; runs till the pre-pack process period ends; Contrast with section 14(4).

How to solve Moratorium and Public Announcement questions

Use this sequence for any case question on moratorium or public announcement.

1Identify the trigger: was an application under section 7, 9 or 10 admitted? The moratorium starts on the insolvency commencement date by order.
2List the facts: who is acting (creditor, owner, lessor, guarantor, supplier, regulator) and what act is attempted.
3Match each act to a limb of section 14(1): suit or execution, transfer of assets, security enforcement, or recovery of property.
4Check the exceptions: section 14(3) (notified transactions, surety to a guarantee), section 14(2) and (2A) (supplies), and the licence Explanation.
5Check the timing: has the moratorium ended through plan approval under section 31(1) or a liquidation order under section 33?
6If the question concerns announcement, test it against section 15(1): content, the IRP's role and the 180-day closing date.
7Conclude clearly: barred or permitted, and what the IRP or affected party should do.

Quickest way: Four limbs, three exceptions, one end date

When to use it: Short case questions where you must decide quickly whether an action is barred.

Write the four limbs of section 14(1) as letters: suits, transfers, security, property.
Ask whether the act fits one limb. If not, the moratorium does not bar it.
Scan for the exceptions: notified transactions, surety, supplies and licences with dues paid.
Check whether the process has ended by plan approval or liquidation order.
State the conclusion in one line, then give the reason.

Common mistakes in Moratorium and Public Announcement

Saying the moratorium also bars action against a guarantor of the corporate debtor.
Students assume a total freeze on everything linked to the debtor.
Fix: Section 14(3)(b) excludes a surety in a contract of guarantee to the corporate debtor from section 14(1). The creditor may proceed against the surety.
Claiming a regulator can cancel a licence because the company is insolvent.
Students overlook the Explanation to section 14(1).
Fix: Licences and similar grants cannot be suspended or terminated on grounds of insolvency, provided current dues during the moratorium are paid.
Saying the moratorium continues until the 180th day in every case.
Confusing the CIRP closing date with the moratorium end.
Fix: Under section 14(4) it lasts until completion of CIRP, but ceases from the date of plan approval under section 31(1) or a liquidation order under section 33.
Treating all suppliers as protected from termination.
Mixing sub-sections (2) and (2A).
Fix: Essential goods or services as specified are protected. Critical supplies are protected on the IRP's or RP's view, but not where dues arising during the moratorium are unpaid.
Stating that the public announcement comes before the IRP is appointed.
Section 13(1) lists the announcement before the appointment.
Fix: Section 13(2) says the announcement is made immediately after the IRP is appointed.
Applying the section 14(4) end point to a pre-packaged process.
Pre-pack provisions are studied separately and mixed up.
Fix: Under section 54E(2), that moratorium runs till the pre-pack process period ends.

Worked examples

Example 1

NCLT admits a section 7 application against Sundaram Textiles Ltd. Its bank, Western Bank, which holds a mortgage over the mill, issues a SARFAESI notice to take possession two weeks later. Is the action valid? Also, Mr. Rao, who guaranteed the company's loan, is sued by the bank on the guarantee. Advise.

Show the solution

Trigger: admission under section 7 leads to an order under section 13 declaring a moratorium under section 14.
Bank's action: enforcing a security interest, including under the SARFAESI Act, 2002, falls within section 14(1)(c).
No exception in section 14(3) applies to the bank's mortgage enforcement.
Guarantor: section 14(3)(b) says section 14(1) does not apply to a surety in a contract of guarantee to the corporate debtor.
So the suit against Mr. Rao is not barred by the moratorium.

Answer: The SARFAESI action against Sundaram Textiles is prohibited during the moratorium and is invalid. The suit against Mr. Rao as surety may continue, as section 14(3)(b) excludes sureties from the moratorium.

Example 2

During CIRP of Kaveri Power Ltd, a state regulator proposes to cancel its generation licence citing insolvency. A raw material supplier also threatens to stop supply, which the RP considers critical. The supplier is unpaid for supplies made before admission. Advise.

Show the solution

Licence: the Explanation to section 14(1) bars suspension or termination on grounds of insolvency, if current dues for the licence during the moratorium are paid.
So cancellation merely because of insolvency is not permitted.
Supply: under section 14(2A), if the RP considers the supply critical to preserve value and run the company as a going concern, it cannot be terminated, suspended or interrupted.
The exception applies to dues arising from supply during the moratorium period. The unpaid pre-admission dues do not fall within that exception.
So the supplier must continue supply, and the company must pay for supplies made during the moratorium.

Answer: The regulator cannot cancel the licence on the ground of insolvency if current dues are paid. The supplier cannot stop supply because of pre-admission dues; it may stop only if dues for supplies made during the moratorium remain unpaid.

Exam tips

Structure answers as provision, facts, conclusion. Name section 14(1) and the specific limb before applying it.
Always check the guarantor point. It is a favourite trap, and section 14(3)(b) is the answer.
In questions on the announcement, list the section 15(1) contents and mention that it is made immediately after the IRP's appointment.
Mention the end of the moratorium under section 14(4) if the facts talk about plan approval or liquidation.
Where the facts mention a pre-pack, cite section 54E and note the different end point.

Practice questions from Corporate Insolvency Resolution Process

Moratorium and Public Announcement: frequently asked questions

When does the moratorium under section 14 begin?

It begins on the insolvency commencement date, when the Adjudicating Authority declares it by order after admitting an application under section 7, 9 or 10. It lasts until completion of the CIRP, subject to plan approval or liquidation order.

Does the moratorium protect a guarantor 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. The creditor can still proceed against the surety under the guarantee.

What must the public announcement of CIRP contain?

Under section 15(1) it contains the debtor's name and address, the registering authority, the last date for claims, the IRP's details, penalties for false or misleading claims, and the closing date, the 180th day from admission.

When does the moratorium cease?

Under section 14(4), it ceases from the date the Adjudicating Authority approves a resolution plan under section 31(1) or passes a liquidation order under section 33. Otherwise it lasts until the CIRP is completed.