Insolvency and Bankruptcy - Law and Practice · Insolvency Resolution of Individuals and Partnership Firms

Insolvency Resolution Process for Individuals under the IBC

Updated 11 October 2026 · Fact-checked

The insolvency resolution process for individuals under Part III of the IBC lets a debtor who has defaulted apply to the Adjudicating Authority under section 94. An interim moratorium starts on filing, a resolution professional is appointed, creditors consider a repayment plan, and the professional supervises its implementation.

Understand Insolvency Resolution Process for Individuals

Part III of the IBC deals with insolvency of individuals and partnership firms. It gives a debtor three routes: fresh start, insolvency resolution and bankruptcy. This topic covers the insolvency resolution route. Its aim is to settle debts through a repayment plan agreed with creditors, instead of sending the debtor straight into bankruptcy.

The process begins with the debtor. A debtor who commits a default may apply to the Adjudicating Authority under section 94, either personally or through a resolution professional. If the debtor is a partner of a firm, the application for the firm needs all or a majority of the partners to file jointly. The application can cover only debts that are not excluded debts.

Some debtors cannot apply. Under section 94(4), you cannot apply if you are an undischarged bankrupt, undergoing a fresh start process, an insolvency resolution process or a bankruptcy process. Under section 94(5), you are also not eligible if an application under this Chapter was admitted in respect of you in the twelve months before the date of your application.

Once the application is filed, section 96 gives protection. An interim moratorium starts on the date of the application, covers all debts and ends on the date of admission. Pending legal actions on debts are deemed stayed and creditors cannot start new ones. For a firm, it operates against all partners as on the date of application.

A resolution professional then prepares and submits the repayment plan with a report. Creditors may meet to consider it. The professional reports on the meeting, and after approval supervises implementation and reports on completion. Compare this with fresh start, which is for debtors with low income and assets and wipes out qualifying debts. Insolvency resolution is for a debtor who can propose to repay under a plan.

Key rules to remember

Who may apply (s.94): Debtor who commits a default → application to Adjudicating Authority, personally or through a resolution professional; For a firm, all or a majority of partners must file jointly. Only non-excluded debts can be covered.
Bars to applying (s.94(4) and (5)): Undischarged bankrupt / fresh start / IRP under way / bankruptcy process under way; or an application under this Chapter admitted in the preceding 12 months; Remember four status bars plus one twelve-month bar.
Interim moratorium (s.96): Starts on the date of application; ceases on the date of admission; Covers all debts. Pending proceedings are deemed stayed. Creditors cannot initiate new ones. For a firm it operates against all partners as on the date of application. Transactions notified by the Central Government are excluded.
RP report on repayment plan (s.106): Plan plus report to the Adjudicating Authority within 21 days from the last date for submission of claims under s.102; The report says whether the plan complies with law, has a reasonable prospect of approval and implementation, and whether a creditors' meeting is needed. If no meeting is recommended, give reasons.
Date of creditors' meeting (s.106(4)): Not less than 14 days and not more than 28 days from the date of submission of the report; The RP must consider the convenience of creditors for date and venue.
Report of the meeting (s.112): RP prepares report: plan approved or rejected, modifications, resolutions and decisions, creditors present and voting records, other information; Voting records are those of each creditor for all meetings.
Supervision (s.116): RP appointed under s.97 or s.98 supervises implementation; may apply to the Adjudicating Authority for directions; The Adjudicating Authority may issue directions on such an application.
Completion (s.117): Within 14 days of completion, RP sends notice of full implementation and a report of receipts and payments; extension up to a further 7 days on application; Documents go to persons bound by the plan under s.115 and to the Adjudicating Authority.
Replacement of RP (s.98): Adjudicating Authority refers to Board within 7 days; Board recommends within 10 days; The debtor or a creditor may apply. Creditors may also apply after a meeting decision to replace the RP.

How to solve Insolvency Resolution Process for Individuals questions

Treat every question as a timeline. Locate the stage the facts have reached, then apply the rule for that stage.

1Identify the debtor and whether it is an individual or a partner of a firm. If a firm, check for a joint application by all or a majority of partners.
2Check eligibility under section 94: default, excluded debts, the four status bars and the twelve-month bar.
3State who filed and how: personally or through a resolution professional.
4Apply the interim moratorium under section 96: start date, end date, stay of pending actions, bar on new actions, partners of a firm.
5Trace the appointment and replacement of the resolution professional, noting the Board's role and the time limits.
6Apply the repayment plan timeline: plan and report within 21 days, meeting 14 to 28 days after the report, report of the meeting.
7Cover implementation and completion: supervision, directions, completion notice within 14 days.
8Conclude clearly: eligible or not, valid or not, with the section cited.

Quickest way: Timeline and tick-list method

When to use it: Use for case-based questions where facts give dates, statuses and who did what.

Write the sequence: application, interim moratorium, RP, plan and report, meeting, meeting report, implementation, completion.
Under each stage write the section number and the one time limit you remember.
Tick each fact in the question against the stage and mark any breach.
Write the conclusion first, then give the provision and facts as support.

Common mistakes in Insolvency Resolution Process for Individuals

Saying the interim moratorium starts on admission.
It is confused with moratoria in the corporate process, which start on admission.
Fix: Under section 96 it starts on the date of the application and ceases on the date of admission.
Ignoring the twelve-month bar.
Students focus on the four status bars in section 94(4) and forget section 94(5).
Fix: Always check if an application under this Chapter was admitted in the preceding twelve months.
Allowing one partner to file for the firm alone.
The joint filing rule in section 94(2) is skipped.
Fix: State that all or a majority of the partners must file jointly.
Mixing up the 21-day, 14 to 28-day and 14-day periods.
Several periods appear in different sections with similar numbers.
Fix: Link each to its stage: 21 days for plan and report, 14 to 28 days for the meeting date, 14 days for the completion notice.
Treating fresh start and insolvency resolution as the same.
Both begin with a debtor application and both have an interim moratorium.
Fix: Fresh start (section 80 application) ends the interim moratorium on admission or rejection, and needs affidavit details. Insolvency resolution (section 94) ends it on admission and leads to a repayment plan.

Worked examples

Example 1

Rajesh Menon, an individual, defaulted on a loan. A fresh start application by him was admitted by the Adjudicating Authority eight months ago. He now files an application under section 94. Can the Adjudicating Authority entertain it?

Show the solution

Rajesh has committed a default, so the basic condition of section 94(1) is met.
Check the bars. Section 94(5) says a debtor is not eligible if an application under this Chapter has been admitted in respect of the debtor in the twelve months before the date of submission.
The earlier application was admitted eight months ago, within twelve months. Facts do not say whether the fresh start process is still running. If it is, section 94(4)(b) bars him too.
Either way he is ineligible.

Answer: Rajesh is not eligible to apply under section 94 because an application under this Chapter was admitted within the preceding twelve months.

Example 2

Meera files an application under section 94 on 5 March. It is admitted on 20 March. A creditor had filed a suit for recovery of a debt on 10 February, still pending. Another creditor files a fresh recovery suit on 12 March. Explain the effect of the interim moratorium.

Show the solution

Under section 96(1)(a), the interim moratorium commences on the date of the application, 5 March, and ceases on the date of admission, 20 March.
The suit filed on 10 February is pending in respect of a debt. Under section 96(1)(b)(i), it is deemed stayed during the interim moratorium.
The fresh suit on 12 March falls within the period. Under section 96(1)(b)(ii), creditors cannot initiate legal action or proceedings in respect of any debt, so it is barred.
The protection applies to all debts, subject to transactions notified by the Central Government under section 96(3).

Answer: The interim moratorium ran from 5 March to 20 March. The pending suit is deemed stayed, and the suit initiated on 12 March is prohibited.

Exam tips

Write the section number beside every rule. Examiners reward the provision-analysis-conclusion pattern.
Memorise the time limits as a short table in your head: 21 days, 14 to 28 days, 14 days plus 7 days.
For firm cases, always mention joint filing and that the moratorium operates against all partners as on the date of application.
If asked to compare fresh start with insolvency resolution, use a two-column layout: trigger, moratorium end, outcome, RP role.

Practice questions from Insolvency Resolution of 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.

CMA FinalCorporate Insolvency Resolution Process under IBC

Insolvency Resolution Process for Individuals: frequently asked questions

When does the interim moratorium start under section 96 of the IBC?

It starts on the date the application is filed under section 94 or 95. It ceases on the date of admission of the application. It applies to all debts.

Who can apply for individual insolvency resolution under section 94?

A debtor who commits a default can apply, personally or through a resolution professional. For a firm, all or a majority of the partners must file jointly.

What is the difference between fresh start and insolvency resolution?

Fresh start is applied for under section 80, and its interim moratorium ends on admission or rejection. Insolvency resolution is applied for under section 94 and aims at a repayment plan agreed with creditors.

Within what time must the RP complete the report on the repayment plan?

Under section 106, the RP submits the plan and report within twenty-one days from the last date for submission of claims under section 102. If a meeting is recommended, it is held not less than fourteen and not more than twenty-eight days after the report.