Creditor-Initiated Insolvency Resolution Process (CIIRP)

A CIRP begins only after the NCLT admits an application, and admission has often taken months. The 2026 Amendment introduced a different path: a process that institutional financial creditors can start themselves, out of court, while the company's management continues to run the business under the watch of a resolution professional. The aim is early, faster rescue with less litigation. This note explains the creditor-initiated insolvency resolution process, how it differs from the CIRP, and where its implementation stands.

1. Place in the Code

• Chapter IV-A. Sections 58A to 58K, inserted by the IBC (Amendment) Act, 2026, take the place of the former Chapter IV on the fast track insolvency resolution process, which had seen little use.
• Status. When the Central Government brought most of the Amendment into force from 26 May 2026, it excluded the provisions on the creditor-initiated process, group insolvency, cross-border insolvency and the Insolvency and Bankruptcy Fund; the IBBI published draft CIIRP Regulations for comment in April 2026, but as of its April to June 2026 newsletter the process had not been notified.
• Notifications needed. The Central Government must also notify the classes of eligible corporate debtors and of financial institutions that may initiate the process, so its practical reach depends on those notifications.

2. Eligibility and Initiation, Sections 58A and 58B

Figure 1: Steps to commence a CIIRP

• Eligible debtors. Corporate debtors within notified thresholds of assets or income, classes of creditors or amounts of debt, or other notified categories; a debtor already in CIRP or liquidation, or that has undergone a CIIRP, pre-pack or CIRP in the preceding three years, is excluded.
• Who initiates. A financial creditor belonging to a notified class of financial institutions, where the corporate debtor has committed a default.
• Approval and notice. The creditor needs the approval of financial creditors of the notified class holding at least 51 per cent in value of their debt, must give the debtor at least 30 days' notice to make representations, and, if it decides to proceed after considering them, must obtain fresh 51 per cent approval within 30 days.
• Appointment. The creditor appoints an insolvency professional against whom no disciplinary proceedings are pending as the resolution professional, who makes a public announcement and informs the NCLT and the IBBI; the process commences on the date of the public announcement.
• Bar on other processes. During the process, no application under sections 7, 9, 10 or 54C may be filed or admitted.

3. Objection by the Corporate Debtor, Section 58C

Within 30 days, the corporate debtor may object to the NCLT. If there was no default and the initiation contravened sections 58A or 58B, the NCLT may declare the process void from the start; if there was a default but the conditions were not complied with, it converts the process into a CIRP. The NCLT must decide within 30 days.

4. Conduct of the Process

• Timeline, section 58D. The process must be completed within 150 days of commencement, extendable once by up to 45 days by the NCLT on the resolution professional's application with 66 per cent approval of the committee of creditors.
• Management, section 58F. The board of directors or partners continue to manage the corporate debtor, but the resolution professional attends meetings of the board, members and committees and may reject their resolutions; a rejected resolution cannot be implemented.
• Resolution professional, section 58E. Calls for claims, prepares the information memorandum, invites plans and reports on compliance with sections 29A and 30; promoters and personnel must cooperate.
• Moratorium, section 58G. There is no automatic moratorium; the resolution professional may apply to the NCLT, with approval of the committee or, before it is constituted, of 51 per cent of the notified financial creditors, and the moratorium runs from the date of the application unless the NCLT rejects it.
• Plan approval, section 58J. A plan approved by 66 per cent of the committee is submitted to the NCLT, which decides under section 31.
• Withdrawal, section 58-I. The process may be withdrawn with 90 per cent approval of the committee, but not before the committee is constituted or after the first invitation for resolution plans; the NCLT decides within 14 days.

Figure 2: The CIRP and the CIIRP compared

5. Conversion into CIRP, Section 58H

Figure 3: Grounds for conversion

• Mandatory conversion. The NCLT must convert the process into a CIRP if no plan is received in time, the debtor or its personnel fail to cooperate, or the plan is rejected under section 31(2); the committee may also resolve by 66 per cent to convert.
• Orders on conversion. The NCLT decides the stage from which the CIRP continues, appoints the resolution professional as interim or resolution professional, declares a moratorium under section 14, and treats the costs of the CIIRP as CIRP costs.
• Effects. The conversion order is deemed an admission under section 7 with the initiating creditor as applicant, pending avoidance proceedings continue, and look-back periods run from the CIIRP commencement date.

6. Frequently Asked Questions

Does a CIIRP begin with an order of the NCLT?

No. It is initiated by the notified financial creditors and commences on the date of the resolution professional's public announcement; the NCLT becomes involved only for objections, moratorium, conversion and plan approval.

Who runs the company during a CIIRP?

Its board of directors or partners, under the oversight of the resolution professional, who may reject their resolutions. This differs from the CIRP, where the board is suspended.

What happens if no plan is approved within 150 days?

Unless the period has been extended by up to 45 days, the NCLT converts the process into a CIRP under section 58H, rather than ordering liquidation.

Can an operational creditor start a CIIRP?

No. Only financial creditors belonging to a class of financial institutions notified by the Central Government can initiate it.

7. Related Topics

• Topic 21: Pre-packaged Insolvency for MSMEs. The other debtor-in-possession process.
• Topic 32: CIRP Timelines. Section 12 and the 330 days.
• Topic 84: CIRP vs Pre-pack vs CIIRP. The three processes compared.