LibraryMock CIRP Scenario: From Application to Resolution Plan

Mock CIRP Scenario: From Application to Resolution Plan

Learn about Mock CIRP Scenario: From Application to Resolution Plan as part of Insolvency and Bankruptcy Code (IBC) Practice

Mock CIRP Scenario: From Application to Resolution Plan

This module walks you through a simulated Corporate Insolvency Resolution Process (CIRP) under India's Insolvency and Bankruptcy Code (IBC), from the initial application to the final resolution plan. Understanding this process is crucial for legal professionals, financial advisors, and stakeholders involved in corporate distress.

Phase 1: Initiation of CIRP

The CIRP begins with the filing of an application before the National Company Law Tribunal (NCLT). This application can be filed by a Financial Creditor, an Operational Creditor, or the Corporate Debtor itself. The NCLT then examines the application for its admissibility.

Who can initiate the CIRP process by filing an application with the NCLT?

A Financial Creditor, an Operational Creditor, or the Corporate Debtor.

Phase 2: Management of Corporate Debtor and Committee of Creditors (CoC)

Once admitted, the IRP takes control of the corporate debtor's management and affairs. The IRP's primary role is to preserve the value of the corporate debtor and facilitate the resolution process. This includes convening meetings of the Committee of Creditors (CoC).

The CoC's decisions are binding on all stakeholders, including the corporate debtor and its employees.

Phase 3: Resolution Plan

The core objective of CIRP is to find a resolution plan that maximizes the value of the corporate debtor. Resolution applicants (potential investors or existing promoters) are invited to submit plans.

Loading diagram...

The process of CIRP can be visualized as a funnel. At the top, many potential resolution applicants submit plans. As the process progresses, these plans are evaluated, and only the most viable ones move forward. The CoC acts as the filter, and the NCLT provides the final approval or directs liquidation if no satisfactory plan emerges. This iterative evaluation and selection process is critical for achieving a successful resolution.

📚

Text-based content

Library pages focus on text content

Phase 4: Approval and Implementation

Once a resolution plan is approved by the CoC, it is submitted to the NCLT for final approval. The NCLT reviews the plan to ensure it is compliant with the IBC and does not contravene any law. If approved, the plan becomes binding on all stakeholders.

What percentage of votes from the Committee of Creditors (CoC) is required to approve a resolution plan?

At least 66% of the voting share of the Committee of Creditors.

The successful implementation of the resolution plan marks the end of the CIRP. If the plan fails or is not implemented, the NCLT can order the liquidation of the corporate debtor.

Key Takeaways

The CIRP is a time-bound process designed to rescue a failing company. It involves multiple stages, from application to resolution plan approval, with the CoC playing a pivotal role. Understanding the nuances of each stage is essential for effective participation and successful outcomes.

Learning Resources

Insolvency and Bankruptcy Code, 2016(documentation)

The primary legislation governing insolvency and bankruptcy in India. Essential for understanding the legal framework of CIRP.

Insolvency and Bankruptcy Board of India (IBBI) - CIRP Regulations(documentation)

Detailed regulations issued by IBBI that govern the conduct of the Corporate Insolvency Resolution Process.

NCLT Website - Orders and Judgments(documentation)

Access to NCLT orders and judgments provides real-world examples and interpretations of CIRP proceedings.

Understanding the Insolvency and Bankruptcy Code, 2016(blog)

A comprehensive overview of the IBC, explaining its objectives and key provisions, including CIRP.

The Corporate Insolvency Resolution Process (CIRP) under IBC(blog)

An article detailing the stages and critical aspects of the CIRP, offering practical insights.

CIRP: A Step-by-Step Guide(blog)

A simplified, step-by-step explanation of the CIRP process, making it easier to grasp the flow.

IBC Explained: From Application to Resolution Plan(video)

A video tutorial that visually explains the entire CIRP journey, from initiation to the resolution plan. (Note: Replace 'example_video_id' with a relevant actual video URL if available, otherwise, this serves as a placeholder for the type of resource.)

Key Amendments and Developments in IBC(blog)

Discusses recent changes and important judicial pronouncements impacting CIRP, crucial for current practice.

Resolution Plans under IBC: An Analysis(blog)

Focuses on the critical aspect of resolution plans, their structure, approval process, and legal implications.

Insolvency and Bankruptcy Code, 2016 - Wikipedia(wikipedia)

Provides a general overview and historical context of the IBC, useful for foundational understanding.