Insolvency board proposes 150-day creditor-initiated insolvency process
April 16, 2026
The moratorium on the assets of the corporate debtor is recommended to be not automatic. The RP must apply to the Adjudicating Authority with CoC approval, and it is then deemed effective from the date of filing.
The Insolvency and Bankruptcy Board of India (IBBI) has floated a discussion paper on the regulations pertaining to creditor-initiated insolvency resolution process (CIIRP)--debtor-in-possession model--which proposes the resolution plan of the corporate debtor to be approved by the adjudicating authority within 150 days of commencement, markedly shorter than the timeline of traditional corporate insolvency resolution process (CIRP) of 330 days.
The CIIRP framework has been introduced for the first time under the Insolvency and Bankruptcy Code (IBC), through the new amendment bill, passed by the Parliament earlier this month.
The IBBI is accepting comments on draft regulations, till April 28.
What is CIIRP?
The framework is premised on four core objectives. They are: (a) enabling creditor-led early intervention after default; (b) preserving management control of the corporate debtor subject to appropriate oversight; (c) providing a structured, time-bound pathway to a commercially viable resolution plan; and (d) facilitating seamless conversion to the Corporate Insolvency Resolution Process (CIRP) where the CIIRP does not yield resolution within prescribed timelines or in certain other specified circumstances.
Under CIIRP, the company undergoing resolution remains under the hands of the corporate debtor during the resolution process. Whereas, in CIRP, the management of the company is given to the resolution professional during this period.
The IBBI draft regulations
As per the draft, the framework introduces a creditor-driven initiation process, that is, a notified class of financial creditors must approve commencement by 51% in value, the corporate debtor receives notice and a 30-day representation window, and only after a second 51% approval a resolution professional is appointed.
The resolution professional is mandated to publish brief particulars of the invitation for expression of interest through a circular within first 50 days of the resolution process commencement date, from interested and eligible prospective resolution applicants to submit resolution plans.
Also, the prospective resolution applications are mandated to submit their resolution applications within the next 15 days.
Additionally, the moratorium on the assets of the corporate debtor is not automatic. The RP must apply to the Adjudicating Authority with CoC approval, and it is deemed effective from the date of filing. Crucially, management remains with the debtor, subject to committee-approved transaction thresholds and RP oversight powers including the right to reject board resolutions.
For withdrawal of the CIIRP, a 90 percent approval from the committee of creditors is mandatory.
Experts’ take
Insolvency experts say that the debtor-in-possession model, combined with structured RP oversight, balances early intervention against undue disruption. The dual-approval mechanism (51% before and after debtor representation) introduces a procedural safeguard against premature initiation, they say.
"However, the framework leaves eligibility criteria (class of corporate debtors, class of financial institutions, and applicable thresholds) entirely to Central Government notification, creating significant regulatory uncertainty at this stage," Jatin Kapoor, Partner at S&A Law Offices.
"Operational creditors have no initiation rights and limited participatory mechanisms beyond claims submission. The absence of an automatic moratorium may undermine the process's effectiveness if dissenting creditors pursue enforcement during the interim period," Kapoor added.
The CIIRP framework has been introduced for the first time under the Insolvency and Bankruptcy Code (IBC), through the new amendment bill, passed by the Parliament earlier this month.
The IBBI is accepting comments on draft regulations, till April 28.
What is CIIRP?
The framework is premised on four core objectives. They are: (a) enabling creditor-led early intervention after default; (b) preserving management control of the corporate debtor subject to appropriate oversight; (c) providing a structured, time-bound pathway to a commercially viable resolution plan; and (d) facilitating seamless conversion to the Corporate Insolvency Resolution Process (CIRP) where the CIIRP does not yield resolution within prescribed timelines or in certain other specified circumstances.
Under CIIRP, the company undergoing resolution remains under the hands of the corporate debtor during the resolution process. Whereas, in CIRP, the management of the company is given to the resolution professional during this period.
The IBBI draft regulations
As per the draft, the framework introduces a creditor-driven initiation process, that is, a notified class of financial creditors must approve commencement by 51% in value, the corporate debtor receives notice and a 30-day representation window, and only after a second 51% approval a resolution professional is appointed.
The resolution professional is mandated to publish brief particulars of the invitation for expression of interest through a circular within first 50 days of the resolution process commencement date, from interested and eligible prospective resolution applicants to submit resolution plans.
Also, the prospective resolution applications are mandated to submit their resolution applications within the next 15 days.
Additionally, the moratorium on the assets of the corporate debtor is not automatic. The RP must apply to the Adjudicating Authority with CoC approval, and it is deemed effective from the date of filing. Crucially, management remains with the debtor, subject to committee-approved transaction thresholds and RP oversight powers including the right to reject board resolutions.
For withdrawal of the CIIRP, a 90 percent approval from the committee of creditors is mandatory.
Experts’ take
Insolvency experts say that the debtor-in-possession model, combined with structured RP oversight, balances early intervention against undue disruption. The dual-approval mechanism (51% before and after debtor representation) introduces a procedural safeguard against premature initiation, they say.
"However, the framework leaves eligibility criteria (class of corporate debtors, class of financial institutions, and applicable thresholds) entirely to Central Government notification, creating significant regulatory uncertainty at this stage," Jatin Kapoor, Partner at S&A Law Offices.
"Operational creditors have no initiation rights and limited participatory mechanisms beyond claims submission. The absence of an automatic moratorium may undermine the process's effectiveness if dissenting creditors pursue enforcement during the interim period," Kapoor added.