Insolvency & Bankruptcy (IBC) — NCLT Advisory | Nainit Savla & Associates

Insolvency & Bankruptcy (IBC) — NCLT Advisory

Q: What documents are required to file a Section 7 CIRP petition?

Form 1 with: record of default from information utility or bank statements/loan accounts showing default; proposed IRP details with IP1 consent and IBBI registration; liability documentation (loan agreement, security docs); and financial creditor status evidence. NCLT must admit within 14 days if complete.

Q: Can a company challenge an IBC CIRP petition filed against it?

Yes — on grounds that default has not occurred, debt is below ₹1 crore, the petitioner lacks standing, or (for Section 9) a genuine pre-existing dispute exists. For Section 7 petitions, the NCLT's primary inquiry is whether default is established — not the merits of the underlying debt.

Q: What is the role of an information utility in IBC proceedings?

IUs (primarily NeSL) collect and authenticate records of financial debt and default. An authenticated IU record of default in a Section 7 petition is primary evidence — NCLT must admit within 14 days if complete and unchallenged.

Q: Can a promoter of the corporate debtor submit a resolution plan?

Generally no — Section 29A(c) disqualifies promoters in management/control of the corporate debtor. Exceptions exist for MSMEs. The Supreme Court has clarified this applies to current promoters at time of insolvency, not necessarily all past promoters.

Q: What happens to ongoing contracts and licences during an IBC CIRP?

Section 14 moratorium prevents termination of essential supplies. Contracts are managed by IRP/RP in the best interest of resolution. Licences continue during CIRP. Under an approved resolution plan, contracts and licences transfer to the resolution applicant without individual novation.

The Insolvency and Bankruptcy Code, 2016 vests the National Company Law Tribunal (NCLT) with exclusive jurisdiction over corporate insolvency resolution and liquidation proceedings — making the NCLT the central institutional pillar of India's restructured insolvency regime. Whether you are a financial creditor seeking to trigger the Corporate Insolvency Resolution Process (CIRP), an operational creditor issuing a demand notice, a corporate debtor responding to an insolvency petition, a resolution applicant evaluating a CIRP opportunity, or a stakeholder navigating an IBC liquidation, our NCLT IBC advisory team provides expert, evidence-based support at every stage of the proceedings.

Section 7 — Financial Creditor Petition

Advisory and preparation support for financial creditors (banks, NBFCs, debenture holders) filing Section 7 CIRP petitions before the NCLT — including default documentation, Form 1 preparation, valuation certificate, and IRP nomination.

Section 9 — Operational Creditor Petition

Advisory on Section 8 demand notice issuance and Section 9 CIRP petition filing by operational creditors — suppliers, contractors, and service providers — including debt documentation, dispute assessment, and NCLT application preparation.

Section 10 — Corporate Debtor Application

Advisory for companies seeking to initiate their own CIRP under Section 10 — appropriate when the corporate debtor itself recognises insolvency and wishes to use the IBC framework to achieve a structured resolution with creditor consent.

Creditor Representation in CIRP

Representation and advisory support for financial and operational creditors participating in ongoing CIRP proceedings — claims filing and verification, CoC meeting participation, resolution plan evaluation, and NCLT hearing attendance.

Resolution Applicant Support

Advisory for resolution applicants evaluating and submitting resolution plans for companies under CIRP — Section 29A eligibility assessment, financial due diligence of the corporate debtor, resolution plan structuring, and CoC presentation preparation.

IBC Liquidation Advisory

Advisory on NCLT liquidation proceedings under Section 33 — liquidation order application, creditor claims in liquidation, Section 53 waterfall distribution analysis, avoidance transaction identification, and dissolution application support.

NCLT and the IBC — Jurisdiction and Process

The NCLT has exclusive jurisdiction over all IBC proceedings involving corporate persons — CIRP petitions by financial and operational creditors, voluntary CIRP initiation by corporate debtors, liquidation orders, voluntary liquidation applications under Section 59, and all applications arising during CIRP and liquidation proceedings (avoidance transactions, interim finance, sale of assets, etc.). The NCLT must admit or reject a Section 7 petition within 14 days; a Section 9 petition within 14 days of the 10-day demand notice response period.

Our IBC NCLT advisory integrates with our comprehensive insolvency services covering the IRP, Resolution Professional, Liquidator, voluntary liquidation, and demand notice services.

Key IBC NCLT Proceedings We Support

Section 7 — financial creditor CIRP petition preparation and filing
Section 9 — operational creditor CIRP petition after Section 8 demand notice
Section 10 — corporate debtor voluntary CIRP application
Section 14 — moratorium enforcement and violations
Section 19 — personnel cooperation and management handover obligations
Section 29A — resolution applicant eligibility challenge applications
Sections 43 to 51 — avoidance transaction applications (preferential, undervalued, extortionate)
Section 60(5) — miscellaneous applications during CIRP and liquidation

Frequently Asked Questions

What documents are required to file a Section 7 CIRP petition?

A Section 7 CIRP petition (Form 1) filed by a financial creditor must be accompanied by: (a) record of default from the information utility (such as the CERSAI or NeSL information utilities) or other evidence of default — bank statements, loan account statements, demand notices, correspondence showing default; (b) name and address of the proposed Interim Resolution Professional along with their written consent (IP1 form) and IBBI registration details; (c) any document relating to the liability of the corporate debtor — such as the loan agreement, security documentation, or board resolutions acknowledging the debt; and (d) a certificate of registration showing the applicant's status as a financial creditor. The NCLT must admit the petition within 14 days if the documents are complete and a default is established.

Can a company challenge an IBC CIRP petition filed against it?

Yes. When a Section 7 or Section 9 CIRP petition is filed against a corporate debtor, the corporate debtor has the right to appear before the NCLT and contest the petition — typically on grounds that: (a) the alleged default has not actually occurred (the debt was repaid or was never due); (b) the debt is genuinely disputed (for Section 9 petitions — a pre-existing dispute prevents admission); (c) the debt amount is below the ₹1 crore threshold; or (d) the petitioner does not have standing as a financial or operational creditor. For Section 7 petitions, the NCLT's primary inquiry is whether a default has occurred — the corporate debtor cannot contest the merits of the underlying debt, only whether the default is established and the petition is procedurally compliant.

What is the role of an information utility in IBC proceedings?

Information Utilities (IUs) are entities registered with the IBBI that collect, store, and verify financial information — particularly records of financial debt and default. The National E-Governance Services Limited (NeSL) is India's operational IU. Under Section 215 of the IBC, financial creditors can authenticate records of financial debt and default with the IU, and these authenticated records serve as primary evidence of default in Section 7 CIRP proceedings — reducing the burden of documentary proof. When a financial creditor files a Section 7 petition with an authenticated IU record of default, the NCLT is required to admit the petition within 14 days if the record is complete and unchallenged.

Can a promoter of the corporate debtor submit a resolution plan?

Generally no — under Section 29A(c) of the IBC, a person who is a promoter or in the management or control of the corporate debtor is disqualified from submitting a resolution plan. This provision was specifically introduced to prevent promoters who caused the company's insolvency from regaining control through the IBC process without accountability. However, the Supreme Court and NCLAT have clarified in subsequent judgments that Section 29A applies to the promoter of the corporate debtor at the time of insolvency — not necessarily to all past promoters. There are also specific exceptions — for instance, for MSMEs, the government has provided that the promoter may submit a plan in certain circumstances.

What happens to ongoing contracts and licences during an IBC CIRP?

During the CIRP moratorium period, Section 14 prohibits termination of essential goods and services to the corporate debtor — preventing suppliers from using insolvency as grounds to cut off supplies critical to the business's continued operation. Ongoing contracts are managed by the IRP/RP — who can decide to continue, terminate, or renegotiate contracts based on what is in the best interest of the resolution process. Licences and registrations of the corporate debtor generally continue during CIRP — regulatory bodies cannot cancel licences solely on account of CIRP initiation. Under an approved resolution plan, contracts, licences, and regulatory permissions typically transfer to the resolution applicant by virtue of the NCLT-approved plan without individual novation requirements.

Expert IBC NCLT Advisory — Creditors, Debtors & Resolution Applicants

CIRP petition preparation, creditor representation, resolution plan advisory, and liquidation support for all IBC NCLT proceedings across India.

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