IBBI Securities & Financial Assets cheat sheet

The Code applies to companies, LLPs, individuals and partnerships; corporate insolvency is governed by the CIRP in Chapter II, individual/partnership insolvency by Part III, and cross-border insolvency provisions (Part IV) remain largely un-notified.

Corporate debtors: default of Rs 1 crore or more triggers a financial creditor's right to file under Section 7; operational creditors file under Section 9 after a 10-day demand notice; the corporate debtor itself files under Section 10.

Section 7 application requires proof of default from records of an information utility or other evidence; NCLT must admit or reject within 14 days of filing, subject to the Section 7(1) conditions.

Section 9 demand notice gives the operational creditor a 10-day window; if the debt is disputed (pre-existing dispute), the application is rejected - the standard is 'existence of dispute', not merits.

Section 10 (voluntary) requires the corporate debtor to show it has not undergone CIRP in the preceding 12 months and is not already under CIRP; the application must be accompanied by special resolution and financial statements.

Section 14 moratorium bars institution/suit, transfer of assets, enforcement of security, recovery proceedings and termination of essential contracts; it does not bar proceedings before the Supreme Court or High Court in certain cases.

Section 12: CIRP must be completed within 330 days (including extensions and litigation); the 330-day outer limit is directory, not mandatory, per the Essar Steel judgment (2019).

Section 29A disqualifies a resolution applicant if it is a wilful defaulter, has an NPA account for over one year, is a connected person of a disqualified person, or has been convicted of an offence punishable with imprisonment of two years or more.

Section 31: the resolution plan approved by the CoC is binding on the corporate debtor and all stakeholders, including the Central and State Governments; the plan must be approved by NCLT.

The IRP is appointed by NCLT on admission and is replaced by the RP elected by the CoC under Section 22; the RP must be a registered insolvency professional and must not be a related party of the corporate debtor.

The CoC consists of financial creditors; the quorum is 33% of voting share; decisions are taken by a 66% vote unless the Code specifies otherwise; operational creditors have no voting rights but are represented.

The resolution plan must be approved by at least 66% of voting share of the CoC; if no plan is approved, the CoC may decide on liquidation under Section 33.

The IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 prescribe the public announcement, information memorandum, expression of interest and evaluation matrix; the RP must submit the information memorandum to the CoC within 14 days of appointment.

The IBBI (Insolvency Professionals) Regulations, 2016 require registration with IBBI, a professional examination, and continuing education; the IP must act within the Code's timelines and maintain confidentiality.

The Insolvency and Bankruptcy Board of India (IBBI) is the regulator under Section 188; it registers IPs, IPAs and information utilities, and issues regulations for the Code.

The NCLT is the adjudicating authority for corporate persons; appeals go to the NCLAT within 30 days, and to the Supreme Court within 45 days; the NCLAT must dispose of appeals within 30 days (extendable).

The Limitation Act, 1963 applies to IBC applications; the limitation period for a Section 7 application begins from the date of default, and a continuing default does not create a fresh cause of action.

The Insolvency and Bankruptcy Code (Amendment) Act, 2019 introduced the 330-day outer limit, the pre-packaged insolvency resolution process (PPIRP) for MSMEs, and the requirement of a CoC-approved plan before withdrawal under Section 12A.