R M   L E G A L

Insolvency and Bankruptcy Code (IBC)

RM Legal advises creditors, companies, promoters and resolution applicants in proceedings under the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal. Companies with their registered office in Gujarat fall under the NCLT's Ahmedabad bench, with appeals to the National Company Law Appellate Tribunal.

What We Do

Our work includes:

  • Applications by financial and operational creditors to start insolvency proceedings
  • Demand notices and replies for operational creditors
  • Defending insolvency applications, including on the ground of a pre-existing dispute
  • Filing and pursuing claims in insolvency and liquidation proceedings
  • Advice to promoters and directors on their obligations and exposure
  • Settlements and withdrawal of proceedings
  • Applications involving personal guarantors to corporate debtors
  • Appeals before the NCLAT

Who Can Initiate Insolvency

  • Financial creditors: such as lenders, can apply on a default of ₹1 crore or more.
  • Operational creditors: such as suppliers and service providers, must first serve a demand notice. The debtor has 10 days to pay or point to a pre-existing dispute. If there is a genuine dispute about the debt, the application will fail.
  • The company itself: can apply to start the process.

The Process

  • Admission: the Tribunal admits the application if a default is established, and appoints an interim resolution professional.
  • Moratorium: on admission, suits and enforcement actions against the company are stayed.
  • Claims and the committee: creditors submit their claims, and a committee of creditors is formed.
  • Resolution plan: resolution applicants submit plans, which require approval by 66% of the committee by voting share, and then by the Tribunal.
  • Timeline: the process must ordinarily be completed within 180 days, extendable by 90 days, with an overall limit of 330 days, including time taken in litigation, which the Supreme Court has held can be extended in exceptional cases.
  • Liquidation: if no plan is approved, the company goes into liquidation.

The 2026 Amendments

The Insolvency and Bankruptcy Code (Amendment) Act, 2026 received Presidential assent on 6 April 2026 and is being brought into force in stages. Among other changes, it requires the Tribunal to decide financial creditors' applications within 14 days, introduces a creditor-initiated insolvency resolution process for notified categories of companies, provides a framework for group and cross-border insolvency, and sets firmer timelines for liquidation.

Pre-Packaged Insolvency for MSMEs

Companies that are micro, small or medium enterprises can use a pre-packaged insolvency resolution process, in which the debtor and its financial creditors agree on a resolution plan before approaching the Tribunal, with existing management generally remaining in control.

Frequently Asked Questions

What is the minimum default to start insolvency proceedings against a company?
₹1 crore.

Can a supplier use the IBC to recover dues?
An operational creditor can apply if the default is ₹1 crore or more and there is no genuine pre-existing dispute. The IBC is a resolution process, not a debt-collection tool, and other recovery routes may be more suitable.

What happens to ongoing cases against the company once insolvency is admitted?
A moratorium takes effect, staying suits, enforcement and recovery actions against the company until the process ends.

Can insolvency proceedings be withdrawn after admission?
Yes, with the approval of 90% of the committee of creditors by voting share and the Tribunal's approval, subject to the timing restrictions introduced by the 2026 amendments.

Are promoters' personal guarantees affected?
Yes. Creditors can initiate separate insolvency proceedings against personal guarantors of a corporate debtor, which are heard by the NCLT.

How long does the insolvency process take?
The law prescribes 180 days, extendable by 90 days, with an outer limit of 330 days, although in practice many cases take longer.

Reviewed by Richa M. Goyal, Managing Partner. Last reviewed: October 2026.

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