Claims in CIRP: Submission, Verification and Collation

Every creditor who wants a share of what the insolvency process produces must file a claim. The claims decide who sits on the committee of creditors and with what voting share, what a resolution applicant must provide for, and how money is distributed. Since an approved resolution plan extinguishes all claims not provided for in it, filing a claim on time is essential. This note explains the claim forms, the timelines, verification and collation, and the treatment of disputed, late and unfiled claims.

1. The Duty to Collate Claims

• Section 15. The public announcement calls on creditors to submit claims and fixes the last date for doing so (Topic 24)
• Section 18(b). The interim resolution professional must receive and collate all the claims submitted by creditors, and the resolution professional maintains an updated list of claims (section 25(2)(e))
• Purpose. Collation fixes the composition and voting shares of the committee of creditors, informs prospective resolution applicants of the debtor's liabilities, and forms the basis of distribution.

2. Claim Forms

Figure 1: Forms for different creditors

• Proof. Each form must be accompanied by proof of the claim: for financial creditors, records from an information utility, financial statements, loan agreements or other documents; for operational creditors, invoices, contracts, demand notices, bank statements or records of an information utility.
• Classes. A financial creditor in a class files Form CA and indicates its choice of authorised representative from the three professionals named in the announcement (Topic 27)
• Workmen and employees. May claim individually in Form D, or through an authorised representative in Form E where there are many such claimants.
• Electronic filing. Claims may be submitted electronically or by post, as permitted in the announcement.

3. Timelines and Verification

Figure 2: From announcement to the list of creditors

• Regulation 12(1). Creditors must submit claims with proof on or before the last date mentioned in the public announcement, which is fourteen days from the appointment of the interim resolution professional.
• Regulation 12(2). A creditor who fails to do so may submit the claim with proof up to the ninetieth day from the insolvency commencement date.
• Regulation 13. The professional verifies every claim within seven days from the last date of receipt and may call for further evidence or clarification; the claims verified decide the committee and are updated as later claims are verified.
• Regulation 14. Where the amount of a claim is not precise because it is contingent or for any other reason, the professional makes the best estimate of the amount based on the information available, and revises it as soon as more information becomes available.
• Regulation 15. A claim denominated in a foreign currency is valued in Indian currency at the official exchange rate as on the insolvency commencement date.
• Valuation date. Claims are generally computed as on the insolvency commencement date, so interest ordinarily stops running for the purposes of the claim from that date.

4. The List of Creditors

• Contents. The list records the names of creditors, the amounts claimed, the amounts admitted, the security held, whether the creditor is a related party, and the voting share of each financial creditor.
• Publicity. It is displayed on the corporate debtor's website if any, filed with the NCLT and presented at the first meeting of the committee, and updated as claims are verified or revised.
• Reconstitution. When claims are admitted or revised after the committee is formed, the committee and voting shares are adjusted accordingly.

5. Disputed Claims

• No adjudication by the professional. The resolution professional verifies claims but cannot adjudicate disputes about them (Swiss Ribbons, 2019); a creditor aggrieved by the rejection or partial admission of its claim may apply to the NCLT.
• Section 60(5). The NCLT has jurisdiction to decide any claim made by or against the corporate debtor in relation to the insolvency resolution (Topic 72)
• Contrast with liquidation. In liquidation, the liquidator decides claims under section 40 in a quasi-judicial capacity, and an appeal lies to the NCLT under section 42 (Topic 54)

6. Late and Unfiled Claims

Figure 3: Rules on valuation, disputes and late claims

• RPS Infrastructure v Mukul Kumar, 2023. Decided on 11 September 2023, the Supreme Court refused to admit a claim, based on an arbitral award under challenge, that was filed 287 days after the ninety day period and after the committee had approved a resolution plan; the Code is time-bound, the public announcement gives deemed knowledge, and allowing such claims would make the process never-ending.
• Ghanashyam Mishra and Sons v Edelweiss ARC, 2021. Once a resolution plan is approved, all claims not part of the plan, including those of the Central Government, State Governments and other authorities, stand extinguished, and no proceedings can be continued for them (Topic 42)
• Delay before plan approval. Tribunals have sometimes allowed claims filed after the ninetieth day but before the committee approved a plan, where the delay was explained and admitting them would not derail the process; after approval, they are generally refused.
• Government authorities. Tax and other authorities must file claims like any other creditor; they cannot recover dues outside the process during the moratorium, and dues not claimed are lost once a plan is approved.

7. Frequently Asked Questions

A supplier learns of the CIRP four months after it began. Can it still file a claim?

The regulations allow claims up to the ninetieth day from the commencement date. After that, admission depends on the tribunal's discretion and the stage of the process; once the committee has approved a plan, a late claim will ordinarily be refused, as in RPS Infrastructure (2023).

How is a claim for damages in a pending suit treated?

It is a contingent or unliquidated claim. The resolution professional makes the best estimate of its value under Regulation 14 and revises it as more information becomes available.

What happens to a tax demand that was never filed as a claim?

It stands extinguished once the resolution plan is approved, since the plan binds the government and claims not provided for in it cannot be enforced (Ghanashyam Mishra, 2021).

8. Related Topics

• Topic 6: Claim, Debt and Default. The meaning of claim.
• Topic 24: Interim Resolution Professional and Public Announcement. Calling for claims.
• Topic 42: Section 31. Approval and the clean slate.