How to Apply for Withdrawal from CIRP Under Amended Section 12A of the Insolvency and Bankruptcy Code 2026

The Insolvency and Bankruptcy Code (Amendment) Act 2026 has fundamentally changed how parties can withdraw from an admitted Corporate Insolvency Resolution Process (CIRP). The substituted Section 12A narrows the withdrawal window to a single phase: after the Committee of Creditors (CoC) is constituted but before the Resolution Professional issues the first invitation for resolution plans in Form G. This guide walks through each step of the withdrawal process under the new framework, from eligibility assessment to NCLT filing.

Who Can This Guide Help

This guide is relevant for applicant creditors (operational or financial) who filed the insolvency application, corporate debtors who have settled the underlying debt and want the CIRP withdrawn, resolution professionals managing an admitted CIRP where parties are exploring settlement, and legal professionals advising any of the above stakeholders.

Step 1: Confirm You Are Within the Withdrawal Window

The amended Section 12A creates three distinct phases. Only Phase 2 permits withdrawal.

• Phase 1 (Admission to CoC constitution): Withdrawal is barred. No application can be filed during this period, regardless of settlement. The NCLAT confirmed in September 2026 that Rule 11 of the NCLT Rules can no longer be invoked to circumvent this bar.

• Phase 2 (CoC constitution to Form G issuance): Withdrawal is permitted with 90% CoC voting share approval. This is your window.

• Phase 3 (After Form G issuance): Withdrawal is permanently barred. Once the Resolution Professional publishes Form G inviting resolution plans, no withdrawal application will be entertained.

In practice: The CoC is typically constituted within 30 days of the CIRP commencement date. Form G is usually issued within 75 to 90 days. This gives parties a practical window of approximately 45 to 60 days to negotiate settlement and secure CoC approval for withdrawal.

Action: Check the CIRP timeline with the Resolution Professional. Obtain written confirmation of whether the CoC has been constituted and whether Form G has been issued. If Form G has already been issued, withdrawal is no longer available under Section 12A.

Step 2: Negotiate and Document the Settlement

Before approaching the CoC, the applicant creditor and the corporate debtor (or its promoters) must reach a settlement agreement. The settlement should address:

• Full or partial payment of the admitted claim: Specify the exact amount, payment schedule, and mode of payment. The CoC will scrutinize whether the settlement adequately compensates the applicant creditor.

• Treatment of CIRP costs: Under Section 12A(3) of the amended Code, the corporate debtor must bear the CIRP costs incurred up to the date of withdrawal. The settlement agreement should explicitly address who bears these costs, which typically include the Resolution Professional's fees, legal costs, and process expenses.

• Representations and warranties: The corporate debtor should represent that it is solvent and capable of continuing as a going concern post-withdrawal.

• Timeline for payment: Specify whether payment is upfront or staggered. The CoC is more likely to approve withdrawal where payment is made upfront or secured by a bank guarantee.

In practice: Many CoC members are reluctant to approve withdrawal where the settlement benefits only the applicant creditor at the expense of other stakeholders. A settlement that addresses the claims of all financial creditors (not just the applicant) significantly improves the chances of securing 90% approval.

Step 3: File the Withdrawal Application With the Resolution Professional

The applicant creditor (the person who filed the original insolvency application) must submit a written application to the Resolution Professional requesting withdrawal of the CIRP. The application should include:

1. A copy of the settlement agreement executed between the parties

2. Proof of payment or security (bank guarantee, escrow arrangement) for the settlement amount

3. A statement confirming that the CIRP costs incurred to date will be borne by the corporate debtor

4. A request that the Resolution Professional place the withdrawal application before the CoC for approval

Important: Under the amended Section 12A, only the applicant creditor can initiate the withdrawal process. The corporate debtor cannot unilaterally seek withdrawal, though it can negotiate settlement with the applicant creditor and facilitate the process.

Step 4: Obtain 90% CoC Voting Share Approval

The Resolution Professional must place the withdrawal application before the CoC at the next meeting or convene a special meeting for this purpose. The withdrawal requires approval by 90% of the voting share in the CoC.

Key considerations for the CoC vote:

• Voting threshold: The 90% requirement is calculated on the basis of voting share, not headcount. A single large financial creditor holding more than 10% of the voting share can block withdrawal.

• Dissenting creditors: Creditors who vote against withdrawal cannot be compelled to accept the settlement terms. However, once 90% approval is secured, the withdrawal binds all creditors.

• Conditional approval: The CoC may attach conditions to its approval, such as requiring the corporate debtor to clear outstanding dues to all financial creditors (not just the applicant) or requiring a specific payment timeline.

• Minutes and resolution: The Resolution Professional must record the CoC's decision in the minutes of the meeting, including the exact voting percentages and any conditions attached to the approval.

In practice: Securing 90% approval is the most challenging step. In cases involving multiple lenders, the applicant creditor and corporate debtor typically need to negotiate side settlements with major financial creditors to secure their votes. The Swiss Ribbons Pvt. Ltd. v. Union of India (2019) observation that 90% was deliberately set as a high threshold to prevent frivolous withdrawals remains relevant under the amended framework.

Step 5: File Form FA Before the NCLT

Once the CoC approves withdrawal, the Resolution Professional must file the withdrawal application before the Adjudicating Authority (NCLT) in Form FA under the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The filing should include:

• The original withdrawal application submitted by the applicant creditor

• The CoC resolution approving withdrawal with the recorded voting percentages

• The settlement agreement and proof of payment or security

• A statement of CIRP costs incurred and confirmation of payment or undertaking by the corporate debtor

• Minutes of the CoC meeting where the withdrawal was approved

Step 6: NCLT Order and Post-Withdrawal Compliance

The NCLT will examine the application and, if satisfied, pass an order allowing withdrawal of the CIRP. Upon the NCLT order:

• Moratorium is lifted: The moratorium under Section 14 of the IBC ceases to apply, and the corporate debtor regains full control of its affairs.

• RP stands relieved: The Resolution Professional's appointment terminates, and management of the corporate debtor reverts to the Board of Directors or partners.

• CIRP costs must be paid: Under Section 12A(3), the corporate debtor is liable for all CIRP costs incurred up to the date of the NCLT's withdrawal order. Failure to pay CIRP costs can result in the NCLT declining to approve withdrawal.

• IBBI intimation: The Resolution Professional must intimate the IBBI about the withdrawal within the prescribed timeline.

Common Pitfalls and How to Avoid Them

• Filing too early (before CoC constitution): Any withdrawal application filed before the CoC is constituted will be rejected under the amended Section 12A(1). Wait until the CoC is formed before initiating the process.

• Filing too late (after Form G): Once Form G has been issued, the window closes permanently. Monitor the CIRP timeline closely and ensure settlement negotiations are concluded before Form G issuance.

• Insufficient CoC approval: Falling even slightly below the 90% threshold means the application cannot proceed. Map the voting shares of all CoC members before the vote and secure commitments in advance.

• Ignoring CIRP costs: Failing to address CIRP costs in the settlement agreement is a frequent reason for NCLT rejection. Always include an explicit provision for CIRP cost payment in the settlement terms.

• Relying on Rule 11 of NCLT Rules: The pre-2026 practice of using Rule 11 inherent powers for pre-CoC withdrawal has been legislatively overruled. Do not attempt this route.

Timeline Summary

• Day 0: CIRP admission order

• Day 1 to 30: Interim Resolution Professional appointed; CoC not yet formed. Withdrawal barred.

• Day 30 to 45: CoC constituted. Withdrawal window opens.

• Day 45 to 90: Negotiate settlement, file application with RP, secure 90% CoC vote, file Form FA with NCLT.

• Day 75 to 90: Form G typically issued. Withdrawal window closes permanently.

Sources and References

• Insolvency and Bankruptcy Code (Amendment) Act, 2026, Section 12A (substituted)

• IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, Regulation 30A and Form FA

• Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17 (Supreme Court on 90% CoC threshold)

• Brilliant Alloys Pvt. Ltd. v. S. Rajagopal (2024) (Supreme Court on pre-CoC withdrawal under erstwhile Section 12A)

• NCLAT Delhi, September 2026 (confirmation of statutory bar on pre-CoC and post-Form G withdrawal)

• IBBI Discussion Paper on Strengthening the Regulatory Framework, July 2, 2026

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Readers should consult qualified legal professionals before acting on any information contained herein.