CIRP Under IBC: Step-by-Step Guide to Corporate Insolvency Resolution in India 2026

The Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC) is the principal mechanism for resolving corporate debt distress in India. Whether you are a creditor seeking to recover dues, a corporate debtor facing financial difficulty, or a potential resolution applicant looking to acquire distressed assets, understanding the step-by-step CIRP process and the significant amendments made in 2025 and 2026 is essential. The IBC has fundamentally transformed India's insolvency landscape, resolving thousands of cases and recovering lakhs of crores for creditors since its enactment.

The CIRP commences when an application is admitted by the National Company Law Tribunal (NCLT) under Section 7 (by financial creditors), Section 9 (by operational creditors), or Section 10 (by the corporate debtor itself). Upon admission, a moratorium under Section 14 takes effect, prohibiting institution or continuation of suits, transfer of assets, and recovery actions against the corporate debtor. An interim resolution professional is appointed, who takes over management of the debtor's affairs. The Committee of Creditors (CoC), comprising financial creditors, is constituted under Section 21. The resolution professional invites expressions of interest and resolution plans from eligible applicants who are not disqualified under Section 29A. The CoC evaluates and approves a resolution plan by a vote of sixty-six percent by value of financial debt. The approved plan is submitted to the NCLT for final approval under Section 31. The entire process must be completed within three hundred and thirty days including any extensions, failing which the debtor proceeds to liquidation.

The IBC framework has seen substantial amendments in 2025 and 2026. The Fourth Amendment to the CIRP Regulations notified in May 2025 introduced part-wise resolution, enabling resolution professionals with CoC approval to invite plans for the corporate debtor as a whole or for sale of individual assets simultaneously, improving flexibility for distressed entities where full-entity revival is not viable. The Fifth Amendment in July 2025 strengthened disclosure norms by requiring the information memorandum to include details of all identified avoidance transactions including preferential, undervalued, fraudulent, and wrongful dealings. The February 2026 Amendment Regulations redefined fair value under Regulation 2(1)(hb) as the estimated realisable value in an arm's length transaction. Most significantly, the Insolvency and Bankruptcy Code (Amendment) Bill, 2025 introduced in August 2025 proposes a new Creditor-Initiated Insolvency Resolution Process (CIIRP) as an alternative to CIRP, allowing specified financial creditors to initiate resolution out of court with fifty-one percent creditor approval by value, with management remaining with the debtor under resolution professional oversight and a shorter timeline of one hundred and fifty days.

Creditors, debtors, and resolution applicants should be aware that the IBC process demands strict compliance with timelines, eligibility requirements, and procedural steps. The Supreme Court has consistently emphasised that the three hundred and thirty day outer limit is mandatory and not merely directory. Resolution applicants must ensure they are not hit by Section 29A disqualifications, which bar wilful defaulters, undischarged insolvents, and connected persons from submitting plans. The proposed CIIRP pathway, once enacted, will offer a faster and less adversarial alternative for financial creditors. Given the complexity of CIRP proceedings and the evolving regulatory landscape, professional legal representation is critical at every stage. Sansa Kanoon Pranali Partners advises creditors, corporate debtors, and resolution applicants on CIRP proceedings, NCLT litigation, resolution plan structuring, and IBC compliance strategy.