IBBI Securities & Financial Assets common mistakes
IBBI Securities & Financial Assets · Understand the traps and how to avoid them.
Applying the Insolvency and Bankruptcy Code, 2016 (IBC) timelines for a corporate insolvency resolution process (CIRP) to a personal guarantor's insolvency proceeding, or vice versa, instead of citing the separate Part III timelines and rules.
Candidates study Part II (corporate) heavily and treat Part III (individuals and partnership firms) as a minor add-on, so they default to the 180/330-day CIRP clock and the corporate process triggers whenever a timeline question appears.
What to do instead
Build a two-column comparison chart for every procedural milestone (trigger, application route, interim resolution professional appointment, timeline, moratorium, repayment plan vs resolution plan, discharge) contrasting Part II with Part III, and rehearse it before every mock so the correct regime is selected from the question's facts, not from habit.
Confusing the roles and statutory functions of the interim resolution professional (IRP), resolution professional (RP) and liquidator, for example stating that the IRP conducts the liquidation or that the RP files the avoidance applications on the adjudicating authority's direction.
The three roles share the same individual in practice, so candidates collapse them into one and lose the distinct statutory duties, appointment mechanics and stage boundaries that exam questions test.
What to do instead
Write a one-page role matrix listing who appoints each, when the role begins and ends, which regulations govern fees and conduct, and which specific duties attach (management vesting, public announcement, committee of creditors constitution, avoidance transaction reporting, liquidation estate custody). Test yourself by covering a column and reciting it.
Treating the committee of creditors (CoC) as entitled to decide questions that actually require the adjudicating authority or the resolution professional, such as approving the resolution plan's legal validity, admitting or rejecting claims, or deciding avoidance transactions.
Commercial decisions by the CoC dominate case law, so candidates over-attribute decision-making power to it and miss the statutory allocation of functions between the CoC, the RP and the National Company Law Tribunal (NCLT).
What to do instead
Maintain a decision-authority table with three columns (CoC, RP, NCLT) and place each recurring decision in exactly one column, citing the relevant section. For each entry, note the voting threshold where applicable, and drill with scenario questions that ask 'who decides' rather than 'what is decided'.
Misapplying the voting thresholds, such as using a simple majority of members present instead of the required percentage of votes of the CoC, or confusing the threshold for approving a resolution plan with the threshold for extending the CIRP or replacing the RP.
Thresholds are scattered across sections and regulations and are expressed as shares of voting rights, not headcounts, so candidates mix up the base of the calculation and the percentage.
What to do instead
Create a threshold sheet listing every decision (resolution plan approval, CIRP extension, RP replacement, CoC meeting requisition, withdrawal under the relevant regulation) with the exact percentage and the base of the vote. Practise questions that give you a CoC composition and ask whether a motion carries, so the arithmetic becomes automatic.
Answering limitation and time-period questions by applying the general Limitation Act, 1963 limitation periods directly to applications under the Code, without accounting for the Code's own treatment of limitation for applications and claims.
Candidates carry over civil-law instincts and assume a straightforward three-year rule, missing the specific statutory and judicial position on how limitation applies to applications and to claims filed before the RP.
What to do instead
Prepare a short note on limitation distinguishing applications to the adjudicating authority from claims submitted in the process, record the leading position accurately, and flag any point you are unsure about for source reading. Answer only what you can cite; where the position is unsettled, state the rule and the reason rather than guessing a period.
Confusing avoidance transactions: describing a preferential transaction as an undervalued transaction, or treating an extortionate credit transaction as a fraudulent trading matter, and missing the look-back periods attached to each.
The categories sit together in the Code and share the same reporting route to the adjudicating authority, so the distinctive elements and the different look-back windows blur together under exam pressure.
What to do instead
Build a four-row table (preferential, undervalued, extortionate credit, fraudulent or wrongful trading) with columns for the defining element, the look-back period, the persons covered and the relief available. Add one short fact pattern per row and practise classifying it in under thirty seconds.
Missing the distinction between the moratorium's protection and its exceptions, for example assuming it bars every suit and every enforcement action, or assuming it extinguishes the debt rather than suspending proceedings.
The moratorium is taught as a headline protection, and the statutory carve-outs and the difference between suspension and extinguishment are glossed over, so candidates overstate its reach.
What to do instead
Reproduce the moratorium provision from memory, list each carve-out beside it, and add a line stating the legal effect (suspension, not discharge). Then answer three scenario questions where one fact sits inside an exception, checking your answer against the provision text.
Ignoring the Insolvency and Bankruptcy Board of India (IBBI) regulations and the bye-laws, model timelines and forms, answering only from the parent Code when the question turns on a procedural requirement such as the contents of a public announcement, the format of a claim, or the conduct of a CoC meeting.
The Code is the familiar text and regulations feel secondary, but a large share of practical questions test procedural detail that exists only in the regulations, bye-laws and circulars.
What to do instead
For each stage of the process, attach the governing regulation number and its key procedural requirements to your Code outline. Keep a running list of forms and their purposes, and revise it weekly so procedural questions are answered from the regulation rather than from general principle.
Misreading the eligibility conditions for who may be a resolution applicant or an insolvency professional, for example ignoring disqualifications, the requirement of registration with the IBBI, or the distinction between eligibility to submit a plan and eligibility to be appointed as RP.
Eligibility rules are spread across the Code, regulations and disciplinary jurisprudence, and candidates treat them as a single list rather than separate tests for separate roles.
What to do instead
Make two separate eligibility checklists, one for resolution applicants and one for insolvency professionals, each with the statutory source and the consequence of disqualification. Add the disciplinary and registration framework, then test with questions that introduce one disqualifying fact and ask for the outcome.
Answering questions about the liquidation process, the liquidation estate and the waterfall of distribution using the CIRP framework, such as assuming the CoC continues to control the process or that the resolution plan priorities apply to distribution.
Liquidation is studied last and thinly, so candidates recycle CIRP concepts and miss the distinct roles of the liquidator, the stakeholders' consultation committee, the liquidation estate's scope and the statutory order of priority.
What to do instead
Draw the liquidation waterfall from memory with each rank and its statutory basis, note which assets are excluded from the estate, and contrast the liquidator's powers and the consultation committee's role with the RP and CoC. Finish with two full-length liquidation scenarios to confirm the framework holds under mixed facts.