IBC Answer Writing Practice I: Filing to Resolution Plan

Examination questions rarely test one point. A single fact pattern may raise classification, limitation, the moratorium and plan approval together. This practice paper gives four such questions covering the first half of the process, from initiation to resolution. Attempt each before reading the answer, and follow the five steps below. Each answer cites the topic notes where the point is treated in full.

Figure 1: Five steps for a multi-issue answer

1. Interest-Free Loan, Section 10A and Limitation

• Issues. (i) Whether an interest-free loan is a financial debt; (ii) whether section 10A applies; (iii) whether the application is within limitation.
• Law. An interest-free loan disbursed for the borrower's use, repayable later, is a financial debt (Orator Marketing, 2021; Topic 97). Section 10A bars applications for defaults arising between 25 March 2020 and 24 March 2021; it turns on the date of default, not the date of the loan (Topic 103). Limitation is three years from default under Article 137, extended by written acknowledgements before expiry, including signed balance sheet entries (Bishal Jaiswal, 2021; Topic 102)
• Application. (i) The loan is a financial debt. (ii) The default occurred on 1 June 2021, after the section 10A period ended, so the bar does not apply. (iii) Limitation from 1 June 2021 would end in June 2024 (later still if the pandemic exclusion up to 28 February 2022 is applied), but the balance sheets signed in each later year acknowledged the debt before each period expired; the last, for 2024–25, signed in 2025, gives a fresh period to 2028.
• Conclusion. All three objections fail. The default of ₹1.5 crore exceeds the threshold, and after 2026 the NCLT must admit a complete application.

2. Pre-existing Dispute, Essential Supply and Cheque Case

• Issues. (i) The fate of EF Ltd's section 9 application; (ii) the cheque case; (iii) the disconnection.
• Law. A plausible dispute existing before the demand notice defeats a section 9 application (Mobilox, 2017; Topic 100), and once a CIRP is admitted on another application, EF Ltd's remedy is to file a claim. Section 138 proceedings are stayed against the company but continue against its directors (P. Mohanraj, 2021; Topic 108). Electricity is an essential supply that cannot be cut off for pre-CIRP dues while current supply is paid for (section 14(2); Topic 107)
• Application. The written quality complaint predates the notice. The CIRP is admitted. The managing director signed the cheques. The plant's electricity is not a direct input to its output.
• Conclusion. (i) EF Ltd's section 9 application fails for the pre-existing dispute and is in any case overtaken by the CIRP; EF Ltd should file its claim. (ii) The cheque case is stayed against GH Ltd but continues against the managing director. (iii) The board must restore supply and file a claim for old dues, being paid for current supply as process costs.

3. CoC Composition and Withdrawal after the Invitation

• Issues. (i) Who sits on the committee and with what voting shares; (ii) whether withdrawal is possible.
• Law. A related party financial creditor, such as a holding company, has no seat or vote (first proviso to section 21(2); Topic 109). Voting shares are computed among the members in proportion to their financial debt. Withdrawal under section 12A needs 90 per cent of the voting share and, after 2026, is barred once the first invitation for plans has been issued (Topic 113)
• Application. Excluding the holding company, the members' debts are 50, 20 and 10 out of 80, giving voting shares of 62.5, 25 and 12.5 per cent. All three voted for withdrawal, which is 100 per cent, but the first invitation had already been issued.
• Conclusion. (i) The committee comprises Bank X (62.5 per cent), Bank Y (25 per cent) and the NBFC (12.5 per cent). (ii) Withdrawal is barred despite unanimous support; the settlement can only be pursued through a resolution plan, subject to section 29A.

4. Section 29A, Minimum Payments and CCI Approval

• Issues. (i) Section 29A; (ii) the minimum payments; (iii) commercial wisdom and the losing bidder; (iv) CCI approval.
• Law. A person with a connected person who is ineligible, such as one in control of a company that has been an NPA for a year, is barred unless overdues are paid before submission (section 29A(c) and (j); Topic 114). Operational creditors must get the higher of their liquidation and waterfall amounts; dissenting financial creditors the lower (sections 30(2)(b) and (ba); Topic 115). The committee's choice between bids is not reviewable (Kalparaj Dharamshi, 2021; Topic 117). After 2026, CCI approval must be obtained before the plan is submitted to the NCLT (proviso to section 31(4))
• Application. NO Corp's chairman is in control of the NPA company, making NO Corp ineligible unless the overdues were paid. Operational creditors receive nil instead of at least ₹10 crore. The dissenting bank's payment meets section 30(2)(ba). The losing bidder raises only commercial points. CCI approval was not obtained before submission.
• Conclusion. The plan cannot be approved as it stands. If NO Corp did not pay the overdues before submission, it is ineligible and the plan must be rejected. Otherwise, the NCLT should give the committee notice to rectify the operational creditors' payment, and the plan cannot proceed without prior CCI approval. The losing bidder's challenge fails.

5. Frequently Asked Questions

How long should an answer to a multi-issue question be?

Long enough to state each issue, the governing section and leading case, a short application and a conclusion; avoid narrating the law beyond what the facts need.

Should an answer mention the pre-2026 position?

Briefly, where the facts straddle the amendment or a displaced case such as Vidarbha Industries or Rainbow Papers might otherwise be cited.

6. Related Topics

• Topic 97: Financial vs Operational Debt under IBC. Where the applied notes begin.
• Topic 139: IBC Penalties after 2026. Offences and civil penalties.
• Topic 141: IBC Answer Writing Practice II. Liquidation, guarantors and appeals.