IIBF Resolution of Stressed Assets key terms

The time-bound, court-supervised procedure under the Code through which a financial creditor, operational creditor or the corporate debtor itself seeks resolution of a corporate debtor's insolvency, ending either in an approved resolution plan or liquidation.

A company, limited liability partnership or other incorporated entity against which a CIRP may be initiated. The Code applies only to incorporated persons, not to individuals or partnerships generally.

Any person to whom a financial debt is owed, including a creditor to whom such debt has been legally assigned or transferred. Banks, NBFCs and bondholders typically fall in this class.

A person to whom an operational debt is owed, such as a supplier of goods or services, a lessor, or an employee. Such creditors have limited voting rights and no seat on the committee unless co-opted.

A debt along with interest that is disbursed against consideration for the time value of money. It includes borrowings, bonds, debentures and amounts raised under lease or hire-purchase arrangements having the commercial effect of borrowing.

A claim in respect of provision of goods or services, including employment, or a debt arising under any law payable to central, state or local government. It excludes purely financial accommodation.

Non-payment of a debt when whole or any part of it has become due and payable and remains unpaid. Default is the trigger event for initiating a CIRP under the Code.

The National Company Law Tribunal, and on appeal the National Company Law Appellate Tribunal, which admits or rejects applications, approves resolution plans and orders liquidation for corporate debtors.

The date on which the Adjudicating Authority admits an insolvency application. From this date the moratorium applies, management vests in the resolution professional and the CIRP clock starts running.

A statutory freeze ordered on admission that bars institution or continuation of suits, recovery actions, enforcement of security and transfer of the corporate debtor's assets during the CIRP period.

An insolvency professional registered with the regulator who is appointed to manage the corporate debtor's affairs, run the CIRP, verify claims and prepare the resolution plan for committee approval.

The professional appointed by the Adjudicating Authority at admission to take over management until the first committee meeting confirms or replaces the appointment as resolution professional.

The decision-making body comprising financial creditors, whose votes are weighted by the value of their admitted claims. It approves key actions and must pass a resolution plan by the prescribed majority.

A proposal submitted by a prospective resolution applicant describing how the corporate debtor will be revived, including the amount paid to creditors, the source of funds and management arrangements after approval.

Any person who submits a resolution plan for the corporate debtor. Statutory ineligibility criteria bar certain persons, such as promoters of defaulting companies and persons convicted of specified offences.

The statutory list of persons disqualified from submitting a resolution plan, including undischarged insolvents, wilful defaulters, promoters of defaulting entities and those convicted of serious economic offences.

The estimated realisable value of the corporate debtor's assets if sold on a going-concern or piecemeal basis in liquidation. A resolution plan must return at least this amount to creditors.

The process of realising and distributing the corporate debtor's assets to creditors in the statutory order of priority, ordered when no compliant resolution plan is approved or the committee so decides.

An insolvency professional appointed by the Adjudicating Authority to take control of the corporate debtor's assets, realise them and distribute proceeds to stakeholders in the prescribed priority order.

The statutory order in which liquidation proceeds are distributed, beginning with insolvency resolution costs, then secured creditors and workmen dues, and ending with equity holders.

A preferential transfer, undervalued transaction, extortionate credit or fraudulent dealing that the resolution professional may challenge before the Adjudicating Authority to restore value to the corporate debtor.

A transfer of property or interest to a creditor that puts that creditor in a better position than it would have been in liquidation, if made within the look-back period and on account of prior debt.

The statutory retrospective window within which related-party and unrelated-party transactions are examined for avoidance. Related-party transactions are generally reviewed over a longer window than unrelated-party ones.

Goods and services that the resolution professional considers necessary to keep the corporate debtor running as a going concern, which suppliers cannot refuse during the CIRP if dues are paid regularly.

The principle that the corporate debtor's business should be kept running during resolution so that enterprise value is preserved and the firm can be sold or revived as an operating entity.

A formal notice served by an operational creditor on the corporate debtor demanding payment of an unpaid operational debt before filing an insolvency application, allowing a short period to pay or dispute.

An insolvency application filed by a financial creditor, alone or jointly, before the Adjudicating Authority to initiate a CIRP against a corporate debtor that has defaulted.

An insolvency application filed by an operational creditor after a demand notice remains unpaid and undisputed, seeking to initiate a CIRP against the corporate debtor.

A voluntary insolvency application filed by the corporate debtor itself, through its board and shareholders, where it has defaulted and wishes to initiate a CIRP.

A debtor-in-possession framework for micro, small and medium enterprises in which a base resolution plan is negotiated with creditors before filing, with a shorter timeline than the standard CIRP.

The mechanism allowing an application to withdraw from a CIRP if approved by ninety per cent of the committee's voting share, typically used where the debtor settles with creditors before a plan is approved.

The specific statutory provision imposing the freeze on recovery actions, security enforcement and asset transfers once an insolvency application is admitted by the Adjudicating Authority.

A document prepared by the resolution professional containing the corporate debtor's financial position, assets, liabilities and business details, circulated to prospective resolution applicants to help them frame plans.

The estimated value of the corporate debtor's assets determined by registered valuers, used alongside liquidation value to assess whether a resolution plan is viable and meets statutory thresholds.

A creditor holding a charge over the corporate debtor's assets. During liquidation, secured creditors may realise their security or surrender it and claim in the waterfall.

A borrower classified by a lender as having deliberately defaulted despite capacity to pay or having diverted funds. Such classification disqualifies a person from acting as a resolution applicant.