CIIRP and Group Insolvency under IBC: Case Studies

The 2026 Amendment created two new frameworks: an out-of-court process that notified lenders can start without going to the NCLT, and a rule-making power for coordinated insolvency of corporate groups. Neither had been brought into force by mid-2026, so an answer must first state that status, and then apply the provisions as enacted. The four questions below do both.

1. The Law in Brief

Figure 1: The creditor-initiated process

• Status. The provisions on the creditor-initiated process, group insolvency, cross-border insolvency and the Insolvency and Bankruptcy Fund were excluded from the commencement on 26 May 2026 and await notification.
• CIIRP. A notified financial institution, with 51 per cent approval of notified financial creditors and after thirty days' notice to an eligible debtor, appoints a resolution professional; the process begins on his public announcement, runs for 150 days extendable once by 45, and ends in a plan approved by 66 per cent or conversion to a CIRP.
• Group insolvency, section 59A. The Central Government may make rules for proceedings against two or more group companies, including a common bench, a common professional, coordination between committees and a committee of committees.

2. Can a Bank Start a CIIRP Today?

• Issue. Whether the CIIRP can be used before notification, and its procedure.
• Law. Chapter IV-A was excluded from the commencement of the 2026 Amendment and requires notification, along with notification of the classes of financial institutions and eligible debtors. Once in force, a notified financial institution needs the approval of notified financial creditors holding 51 per cent in value, must give the debtor at least thirty days' notice, must obtain fresh 51 per cent approval within thirty days after considering representations, and appoints a resolution professional whose public announcement commences the process.
• Application. Unless the provisions and the relevant classes have been notified, AB Bank cannot start a CIIRP. Its 60 per cent support would meet the 51 per cent requirement once notified.
• Conclusion. AB Bank should check whether Chapter IV-A and the notifications are in force. If not, its route is a section 7 application. Once notified, and if CD Ltd is an eligible debtor, it may follow the steps above.

3. When Is a CIIRP Converted into a CIRP?

• Issue. The resolution professional's veto, conversion to CIRP for non-cooperation, and the effects of conversion.
• Law. Under section 58F, the board continues to manage, but the resolution professional may reject resolutions of the board, members or committees, and a rejected resolution cannot be implemented. The NCLT must convert the process into a CIRP if the debtor or its personnel fail to cooperate. On conversion, the order is deemed an admission under section 7 with the initiating creditor as applicant, the costs of the CIIRP are treated as CIRP costs, pending avoidance proceedings continue, and look-back periods run from the CIIRP commencement date.
• Application. The board implemented a rejected resolution and denied access to records, which is non-cooperation.
• Conclusion. The resolution professional should apply to the NCLT, which must convert the process into a CIRP, suspending the board. The factory sale may be challenged as void and as an avoidance transaction, with the look-back counted from the CIIRP commencement date.

Figure 2: Status and key features of the 2026 frameworks

4. Is There a Moratorium in a CIIRP?

• Issue. Whether a moratorium applies automatically in a CIIRP, and the conditions and timing of withdrawal.
• Law. Section 58G provides no automatic moratorium; the resolution professional may apply, with the approval of the committee or, earlier, 51 per cent of the notified creditors, and the moratorium runs from the date of application unless rejected. Section 58-I permits withdrawal with 90 per cent approval of the committee, but not before it is constituted or after the first invitation for plans, and the NCLT decides within fourteen days. Section 58D limits the process to 150 days, extendable once by 45 days with 66 per cent approval.
• Application. The supplier's suit is not barred unless a moratorium has been applied for. The withdrawal vote of 92 per cent comes after the committee was formed and before invitation. At day 160, the process is beyond 150 days and must have been extended.
• Conclusion. If no moratorium application was made, the suit may proceed; the professional should apply if protection is needed. Withdrawal may be allowed by the NCLT within fourteen days, provided the process was validly extended beyond day 150; if it was not, the process should already have been converted to a CIRP.

5. Can Group Companies Be Resolved Together?

• Issue. Whether insolvency proceedings of group companies can be coordinated or consolidated.
• Law. Each company is a separate legal person, and the Code applies company by company. In State Bank of India v Videocon Industries (2019), the NCLT Mumbai Bench consolidated the CIRPs of thirteen group companies under its inherent powers, considering common control, interdependence, intertwined accounts, common lenders and pooling of resources. Section 59A, inserted in 2026, empowers the Central Government to make rules for group proceedings, including a common bench, a common professional and a committee of committees, but it has not yet been notified.
• Application. The three companies share a plant, lenders and accounts, which are the factors the NCLT relied on in Videocon. The statutory framework is not yet available.
• Conclusion. Until the group rules are notified, the lenders may seek transfer of the proceedings to one bench and procedural coordination, and, in an exceptional case like this, consolidation under the NCLT's inherent powers, bearing in mind the risk to creditors of the stronger companies. Once the rules are notified, they should use the statutory framework.

6. Frequently Asked Questions

What did the CIIRP replace?

The fast track insolvency resolution process in the former Chapter IV, which had seen little use.

Must the CIIRP plan be approved by the NCLT?

Yes. A plan approved by 66 per cent of the committee is submitted to the NCLT, which decides under section 31 (section 58J).

Must group rules be laid before Parliament?

Yes. Draft rules must be laid before each House for thirty days, during which either House may disapprove or modify them.

7. Related Topics

• Topic 62: CIIRP. Chapter IV-A.
• Topic 63: Group Insolvency. Section 59A.
• Topic 133: Personal Guarantor Insolvency. Part III proceedings.