Section Summary

The Insolvency &

Bankruptcy Code, 2016
The Insolvency & Bankruptcy Code, 2016–Section Summary

 AA – AA
 CD – CD
 CIRP – CIRP
 PPIRP – Pre-packed Insolvency Resolution Process
 NCLT- National Company Law Tribunal
 NCLAT – National Company Law Appellate Tribunal
 FC – FC
 OC – OC

SECTION SUMMARY

PART I PRELIMINARY (Section 1 - 3)

PART II INSOLVENCY RESOLUTION AND LIQUIDATION FOR CORPORATE
PERSONS (Section 4-77)

Chapter I. PRELIMINARY (Section 4 & 5)

Chapter II. CIRP (Section 6 to 32)

Chapter III. LIQUIDATION PROCESS (Section 33 to 54)

Chapter III A. PRE-PACKAGED INSOLVENCY RESOLUTION

PROCESS (Section 54A. to 54P.)

Chapter IV. FAST TRACK CIRP (Section 55 to 58)

Chapter V. VOLUNTARY LIQUIDATION OF CORPORATE PERSONS

(Section 59)

Chapter VI. AA FOR CORPORATE PERSONS (Section 60 to 67)

Chapter VII. OFFENCES AND PENALTIES (Section 68 to 77)

Section No. Section Heading Provisions

Section 1 Short title, extent,  Extends to the whole of India
commencement  Enforcement date 28th May, 2016
and application
Section 2 Application  Applicable on:
--Company
--Company governed by any special Act
--Limited Liability Partnership
--Other body incorporated
--Personal guarantors to CDs
--Partnership firms or proprietorship firms and
--Individuals, other than personal guarantors to CDs
in relation to their insolvency, liquidation, voluntary
liquidation or bankruptcy, as the case may be

2
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

Section Corporate person  Company, limited liability partnership, or any other person
3(7) incorporated with limited liability under any law for the
time being in force but shall not include any financial
service provider
Section CD  Corporate person who owes a debt to any person
3(8)
Section Creditor  Person to whom a debt is owed
3(10)  Includes a FC, an OC, a secured creditor, an unsecured
creditor and a decree holder
Section Default  Non-payment of debt when whole or any part or
3(12) instalment of the amount of debt has become due and
payable and is not paid by the debtor or the CD, as the
case may be
Section Insolvency  Person enrolled under section 206 with an insolvency
3(19) professional professional agency as its member and
 Registered with the Board as an insolvency professional
under section 207
Section Insolvency  Person registered with the Board under section 201 as an
3(20) professional insolvency professional agency
agency
Section Information utility  Person who is registered with the Board as an information
3(21) utility under section 210
Section 4 Application of Part  Apply to matters relating to the insolvency and liquidation
II of CDs -minimum amount of default -one crore rupees
 Minimum amount of default for the matters relating to the
PPIRP of CD- Ten lakh rupees
Section AA  National Company Law Tribunal constituted under section
5(1) 408 of the Companies Act, 2013
Section 5 Base resolution  Resolution plan provided by the CD under section 54A
(2A) plan (4)(c)
Section Corporate  CD; or
5(5) applicant  Member or partner of the CD authorised to make an
application for the CIRP “or the pre-packaged insolvency
resolution process, as the case may be, under the
constitutional document of the CD; or
 Individual who is in charge of managing the operations
and resources of the CD; or
 Person who has the control and supervision over the
financial affairs of the CD
Section Corporate  Corporate person who is the surety in a contract of
5(5A) guarantor guarantee to a CD
Section Financial Creditor  Person to whom a financial debt is owed and includes a
5(7) person to whom such debt has been legally assigned or
transferred to
Section Insolvency  Date of admission of an application for initiating CIRP by
5(12) commencement the AA under sections 7, 9 or section 10, as the case may
date be
Section Insolvency  Period of 180 from the insolvency commencement date-

3
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

5(14) resolution process ending on 180th day
period
Section Operational  Person to whom an operational debt is owed and includes
5(20) Creditor any person to whom such debt has been legally assigned
or transferred
Section Resolution  Insolvency professional appointed to conduct the CIRP or
5(27) Professional the prepackaged insolvency resolution process, as the
case may be, and includes an interim resolution
professional
Section 6 Persons who may  CD commits a default:
initiate CIRP --FC,
--OC or
--CD itself
may initiate CIRP
Section 7 Initiation of CIRP  FC:
by FC --either by itself or
--jointly with other FCs, or
--any other person on behalf of the FC
 If FCs under Section 21(6A) (a) & (b) want to initiate
CIRP, they can only do so jointly by 100 of them, or 10%
of them in the same class, whichever is less
 Applications by allottees in real estate projects can only
be filed jointly by at least 100 allottees of the same
project, or 10% of the total allottees of a project,
whichever is less
 Along with application furnish:
--record of the default recorded with the information utility
or other specified record or evidence of default;
--name of the resolution professional proposed to act as
an interim resolution professional; and
--any other information specified by the Board
 AA within fourteen days of the receipt of the application
ascertain the existence of a default from the records of an
information utility or on the basis of other evidence
furnished by the FC
 IfAA is satisfied that:
--default has occurred and the application is complete,
and there is no disciplinary proceedings pending against
the proposed resolution professional, it may, by order,
admit such application; or
--default has not occurred or the application is incomplete
or any disciplinary proceeding is pending against the
proposed resolution professional, it may, by order, reject
such application

--AA before rejecting the application give a notice to the

applicant to rectify the defect in his application within
seven days of receipt of such notice
 CIRP commences from the date of admission of the

4
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

application
Section 8 Insolvency  OC on the occurrence of a default, deliver a demand
resolution by OC notice of unpaid operational debtor copy of an invoice
demanding payment of the amount involved in the default
to the CD
 CD within ten days of the receipt of the demand notice or
copy of the invoice bring to the notice of the OC:
--existence of a dispute, if any, and record of the
pendency of the suit or arbitration proceedings filed
before the receipt of such notice or invoice in relation to
such dispute;
--payment of unpaid operational debt:
# by sending an attested copy of the record of
electronic transfer of the unpaid amount from the bank
account of the CD; or
# by sending an attested copy of record that the OC
has encashed a cheque issued by the CD
Section 9 Application for  After expiry of ten days from the date of delivery of the
initiation of CIRP notice or invoice demanding payment if the OC does not
by OC receive payment from the CD or notice of the dispute the
OC may file an application before the AA for initiating a
CIRP
 Along with the application furnish:
-- copy of the invoice demanding payment or demand
notice delivered by the OC to the CD;
--affidavit to the effect that there is no notice given by the
CD relating to a dispute of the unpaid operational debt;
--copy of the certificate from the financial institutions
confirming that there is no payment of an unpaid
operational debt
--copy of any record with information utility confirming that
there is no payment of an unpaid operational debt by the
CD, if available; and
--any other proof confirming that there is no payment of
an unpaid operational debt by the CD or such other
information
 May propose a resolution professional to act as an interim
resolution professional
 Authority within 14 days of the receipt of the application:
-- admit or reject the application and communicate such
decision to the OC and the CD
 Application be admitted if:
--it is complete;
-- there is no payment of the unpaid operational debt;
--invoice or notice for payment to the CD has been
delivered by the OC;
--no notice of dispute has been received by the OC or
there is no record of dispute in the information utility; and
--no disciplinary proceeding pending against any

5
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

resolution professional proposed, if any
 Application be rejected if:
--it is incomplete;
--there has been payment of the unpaid operational debt;
-- the creditor has not delivered the invoice or notice for
payment to the CD;
--notice of dispute has been received by the OC or there
is a record of dispute in the information utility; or
--any disciplinary proceeding is pending against any
proposed resolution professional
# AA, shall before rejecting an application give a
notice to the applicant to rectify the defect in his
application within seven days of the date of receipt of such
notice
 CIRP commences from the date of admission of the
application
Section 10 Initiation of CIRP  Default by CD then corporate applicant may file an
by corporate application for initiating CIRP with the AA
applicant  Along with application furnish:
--information relating to its books of account and other
documents for the specified period;
--information relating to the resolution professional
proposed to be appointed as an interim resolution
professional; and
--special resolution passed by shareholders of the CD or
the resolution passed by at least three-fourth of the total
number of partners of the CD, as the case may be,
approving filing of the application
 Within 14 days of receipt of applicationAA shall:
--admit the application, if it is complete and no disciplinary
proceeding is pending against the proposed resolution
professional; or
--reject the application, if it is incomplete or any
disciplinary proceeding is pending against the proposed
resolution professional
# AA shall, before rejecting an application, give a
notice to the applicant to rectify the defects in his
application within seven days from the date of receipt of
such notice
 CIRP commences from the date of admission of the
application
Section 11 Persons not  CD undergoing a CIRP or a prepackaged insolvency
entitled to make resolution process; or
application  FC or an OC of a CD undergoing a PPIRP; or
 CD having completed CIRP twelve months preceding the
date of making of the application; or
 CD in respect of whom a resolution plan has been
approved under Chapter III-A, twelve months preceding
the date of making of the application; or

6
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

 CD or a FC who has violated any of the terms of
resolution plan which was approved twelve months before
the date of making of an application under this Chapter; or
 CD in respect of whom a liquidation order has been made
Section 12 Time-limit for  Be completed within 180 days from the date of admission
completion of of application
insolvency  Application by Resolution professional file to the AA to
resolution process extend the period of CIRP if instructed to do so by a
resolution passed at a meeting of the CoC by a vote of
sixty-six per cent of the voting shares
 Further extension byAA not exceeding 90 days-not be
granted more than once
 Mandatorily be completed within a period of 330 days
from the insolvency commencement date, including any
extension of the period of CIRP and the time taken in
legal proceedings in relation to such resolution process of
the CD
Section Withdrawal of  On an application made by the applicant with the approval
12A application of 90% per cent voting share of the CoC
admitted under
section 7, 9 or 10
Section 13 Declaration of  AA after admission of application by an order:
moratorium and --declare a moratorium;
public --cause a public announcement of the initiation of CIRP
announcement and call for the submission of claims; and
--appoint an interim resolution professional
 Public announcement be made immediately after the
appointment of the interim resolution professional
Section 14 Moratorium  On the insolvency commencement dateAA by order
declare moratorium for prohibiting:
--institution of suits or continuation of pending suits or
proceedings against the CD including execution of any
judgment, decree or order in any court of law, tribunal,
arbitration panel or otherAA;
--transferring, encumbering, alienating or disposing of by
the CD any of its assets or any legal right or beneficial
interest therein;
--any action to foreclose, recover or enforce any security
interest created by the CD in respect of its property
including any action under the Securitisation and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002;
--recovery of any property by an owner or lessor where
such property is occupied by or in the possession of the
CD
Section 15 Public  Shall include information like:
announcement of --name and address of the CD under the CIRP;
CIRP --name of the AA with which the CD is incorporated or
registered;

7
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

--last date for submission of claims, as may be specified;
--details of the interim resolution professional who shall be
vested with the management of the CD and be
responsible for receiving claims;
--penalties for false or misleading claims; and
--the date on which the CIRP shall close, which shall be
the one hundred and eightieth day from the date of the
admission of the application under sections 7, 9 or section
10, as the case may be
Section 16 Appointment and  AA shall appoint an interim resolution professional on the
tenure of interim insolvency commencement date
resolution  Resolution Professional as proposed in the application
professional under section 7 or section 10, shall be appointed as the
interim resolution professional, if no disciplinary
proceedings are pending
 Where the application for CIRP is made by an OC and:
--no proposal for an interim resolution professional is
made, the AA shall make a reference to the Board for the
recommendation of an insolvency professional who may
act as an interim resolution professional;
--a proposal for an interim resolution professional is
made, the resolution professional proposed, be appointed
as the interim resolution professional, if no disciplinary
proceedings are pending
 Board within ten days of the receipt of a reference from
the AA recommend the name of an insolvency
professional
 Term of the interim resolution professional continue till the
date of appointment of the resolution professional
Section 17 Management of  Interim Resolution Professional shall:
affairs of CD by --manage the affairs of the CD;
interim resolution --exercise powers of the board of directors or the partners
professional of the CD, as the case may be
--be provided reports by the officers and managers of the
CD and access to such documents and records as may
be required;
--require the financial institutions maintaining accounts of
the CD to act on its instructions in relation to such
accounts and furnish all information relating to the CD
available with them
Section 18 Duties of interim  Collect all information relating to the assets, finances and
resolution operations of the CD for determining the financial position
professional of the CD
 Receive and collate all the claims submitted by creditors
to him;
 Constitute a CoC;
 Monitor the assets of the CD and manage its operations
until a resolution professional is appointed by the CoC;
 File information collected with the information utility, if

8
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

necessary; and
 Take control and custody of any asset over which the CD
has ownership rights as recorded in the balance sheet of
the CD, or with information utility or the depository of
securities or any other registry that records the ownership
of assets
 To perform such other duties as may be specified by the
Board
Section 21 CoC  Interim resolution professional shall after collation of all
claims received against the CD and determination of the
financial position of the CD, constitute a CoC
 CoC shall comprise all FCs of the CD: if FC is a related
party of the CD, they shall not have any right of
representation, participation or voting in a meeting of the
CoC
 All decisions of the CoC be taken by a vote of not less
than fifty-one per cent of voting share of the FCs
 Resolution professional shall make available any financial
information required by the CoC within seven days of
such requisition
Section 22 Appointment of  First meeting of the CoC held within seven days of its
resolution constitution
professional  CoC, may, in the first meeting, by a majority vote of not
less than sixty-six per cent of the voting share of the FCs,
either appoint the interim resolution professional as a
resolution professional or replace the interim resolution
professional by another resolution professional
 CoC if resolves to:
-- continue the interim resolution professional as
resolution professional it shall communicate its decision to
the interim resolution professional, the CD and the AA; or
-- to replace the interim resolution professional, it shall file
an application before the AA for the appointment of the
proposed resolution professional along with a written
consent from the proposed resolution professional in the
specified form
# AA shall forward the name of the resolution
professional proposed to the Board for its confirmation
and shall make such appointment after confirmation by
the Board
# If Board does not confirm the name of the proposed
resolution professional within ten days of the receipt of the
name,AA shall, by order, direct the interim resolution
professional to continue to function as the resolution
professional until such time the Board confirms the
appointment of the proposed resolution professional
Section 24 Meeting of CoC  Members of the CoC meet in person or by specified
electronic means
 All meetings of the CoC be conducted by the resolution

9
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

professional
 Resolution professional shall give notice of each meeting
to:
--CoC, including the authorised representatives;
--members of the suspended Board of Directors or the
partners of the corporate persons, as the case may be;
--OCs or their representatives if the amount of their
aggregate dues is not less than ten per cent of the debt
 Directors, partners and one representative of OCs may
attend the meetings of CoC, but not have any right to vote
in such meetings
Section 25 Duties of resolution  To preserve and protect the assets of the CD, including
professional the continued business operations
--take immediate custody and control of all the assets of
the CD, including the business records of the CD;
--represent and act on behalf of the CD with third parties,
exercise rights for the benefit of the CD in judicial, quasi-
judicial or arbitration proceedings;
--raise interim finances subject to the approval of the CoC
under section 28;
--appoint accountants, legal or other professionals in the
manner as specified by Board;
--maintain an updated list of claims;
--convene and attend all meetings of the CoC;
--prepare the information memorandum in accordance
with section 29;
--invite prospective resolution applicants, who fulfil such
criteria as may be laid down by him with the approval of
CoC, having regard to the complexity and scale of
operations of the business of the CD and such other
conditions as may be specified by the Board, to submit a
resolution plan or plans;
--resent all resolution plans at the meetings of the CoC;
--file application for avoidance of transactions in
accordance with Chapter III, if any; and
--such other actions as may be specified by the Board.
Section 27 Replacement of  CoC may, at a meeting, by a vote of sixty-six per cent of
resolution voting shares, resolve to replace the resolution
professional by professional, subject to a written consent from the
CoC proposed resolution professional
 CoC forward the name of the insolvency professional
proposed by them to the AA which shall forward the same
to the Board for its confirmation
Section 28 Submission of  Resolution applicant may submit a resolution plan to the
resolution plan resolution professional prepared on the basis of the
information memorandum
 Resolution professional shall:
--examine each resolution plan received by him
--present to the CoC for its approval such resolution plans

10
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

 CoC may approve a resolution plan by a vote of not less
than sixty-six per cent of voting share of the FCs, after
considering:
--its feasibility and viability
--including the priority and value of the security interest of
a secured creditor, and
--such other requirements as may be specified by the
Board
 Resolution applicant may attend the meeting of the CoC
in which the resolution plan of the applicant is considered
but shall not have a right to vote at the meeting of the
CoC unless such resolution applicant is also a FC
 Resolution professional shall submit the resolution plan as
approved by the CoC to the AA
Section 31 Approval of  AA if satisfied that resolution plan:
resolution plan --meets all the requirements it shall by order approve the
resolution plan which shall be binding on the CD and its
employees, members, creditors including the Central
Government, any State Government or any localAA to
whom a debt in respect of the payment of dues arising
under any law for the time being in force, such as
authorities to whom statutory dues are owed, guarantors
and other stakeholders involved in the resolution plan
# after approval moratorium order passed shall cease
to have effect; and
# resolution professional shall forward all records
relating to the conduct of the CIRP and the resolution plan
to the Board to be recorded on its database
--does not confirm to the requirements it may, by an
order, reject the resolution plan
Section 33 Initiation of  AA:
liquidation --before the expiry of the insolvency resolution process
period or the maximum period permitted for completion of
the process or the fast-track CIRP, as the case may be,
does not receive a resolution plan; or
--rejects the resolution plan for the non-compliance of the
requirements specified therein,
it shall:
--pass an order requiring the CD to be liquidated;
--issue a public announcement stating that the CD is in
liquidation; and
--require such order to be sent to the AA with which the
CD is registered
 Resolution professional, at any time during the CIRP but
before confirmation of resolution plan, intimates the AA of
the decision of the CoC approved by not less than sixty-
six percent of the voting share to liquidate the CD, the AA
shall pass a liquidation order
-- CoC may take the decision to liquidate the CD, any time

11
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

after its constitution and before the confirmation of the
resolution plan, including at any time before the
preparation of the information memorandum
 Resolution plan approved by the AA under section 31 or
section 54L (1), is contravened by the concerned CD, any
person other than the CD, whose interests are
prejudicially affected by such contravention, may make an
application to the AA for a liquidation order
 On receipt of an application if the AA determines that the
CD has contravened the provisions of the resolution plan,
it shall pass a liquidation order

Section 34 Appointment of  AA passes an order for liquidation of the CD, the
liquidator and fee resolution professional appointed for the CIRP or for the
to be paid PPIRP act as the liquidator
 All powers of the board of directors, key managerial
personnel and the partners of the CD, as the case may
be, shall cease to have effect and shall be vested in the
liquidator
 AA shall by order replace the resolution professional, if:
--resolution plan submitted by the resolution professional
was rejected for failure to meet the requirements; or
--Board recommends the replacement of a resolution
professional to the AA for reasons to be recorded in
writing; or
--resolution professional fails to submit written consent
# For the above reasons AA may direct the Board to
propose the name of another insolvency professional to
be appointed as a liquidator
# Board shall propose the name of another insolvency
professional along with written consent from the
insolvency professional within ten days of the direction
issued by the AA
#AA shall, on receipt of the proposal of the Board for the
appointment of an insolvency professional as liquidator,
by an order appoint such insolvency professional as the
liquidator
# Fees for the conduct of the liquidation proceedings
shall be paid to the liquidator from the proceeds of the
liquidation estate
Section 35 Powers and duties  To verify claims of all the creditors;
of liquidator  To take into his custody or control all the assets, property,
effects and actionable claims of the CD;
 To evaluate the assets and property of the CD in the
manner as may be specified by the Board and prepare a
report;
 To take such measures to protect and preserve the
assets and properties of the CD as he considers
necessary;

12
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

 To carry on the business of the CD for its beneficial
liquidation as he considers necessary;
 To sell the immovable and movable property and
actionable claims of the CD in liquidation by public auction
or private contract, with power to transfer such property to
any person or body corporate, or to sell the same in
parcels in such manner as may be specified;
--liquidator shall not sell the immovable and movable
property or actionable claims of the CD in liquidation to
any person who is not eligible to be a resolution applicant
 To draw, accept, make and endorse any negotiable
instruments including bill of exchange, hundi or
promissory note in the name and on behalf of the CD,
with the same effect with respect to the liability as if such
instruments were drawn, accepted, made or endorsed by
or on behalf of the CD in the ordinary course of its
business;
 To take out, in his official name, letter of administration to
any deceased contributory and to do in his official name
any other act necessary for obtaining payment of any
money due and payable from a contributory or his estate
which cannot be ordinarily done in the name of the CD,
and in all such cases, the money due and payable shall,
for the purpose of enabling the liquidator to take out the
letter of administration or recover the money, be deemed
to be due to the liquidator himself;
 To obtain any professional assistance from any person or
appoint any professional, in discharge of his duties,
obligations and responsibilities;
 To invite and settle claims of creditors and claimants and
distribute proceeds in accordance with the provisions of
this Code;
 To institute or defend any suit, prosecution or other legal
proceedings, civil or criminal, in the name of on behalf of
the CD;
 To investigate the financial affairs of the CD to determine
undervalued or preferential transactions;
 To take all such actions, steps, or to sign, execute and
verify any paper, deed, receipt document, application,
petition, affidavit, bond or instrument and for such
purpose to use the common seal, if any, as may be
necessary for liquidation, distribution of assets and in
discharge of his duties and obligations and functions as
liquidator;
 To apply to the AA for such orders or directions as may
be necessary for the liquidation of the CD and to report
the progress of the liquidation process in a manner as
may be specified by the Board; and
 To perform such other functions as may be specified by

13
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

the Board
Section 36 Liquidation estate  Liquidator shall:
--form an estate of the assets -called the liquidation estate
in relation to the CD
-- hold the liquidation estate as a fiduciary for the benefit
of all the creditors
 Liquidation estate shall:
-- comprise all liquidation estate assets which shall
include:
# assets over which the CD has ownership rights;
# assets that may or may not be in possession of the
CD including but not limited to encumbered assets;
# tangible assets, whether movable or immovable;
# intangible assets including but not limited to
intellectual property, securities (including shares held in a
subsidiary of the CD) and financial instruments, insurance
policies, contractual rights;
# assets subject to the determination of ownership by
the court orAA;
# assets or their value recovered through proceedings
for avoidance of transactions in accordance with this
Chapter;
# asset of the CD in respect of which a secured creditor
has relinquished security interest;
# any other property belonging to or vested in the CD at
the insolvency commencement date; and
# all proceeds of liquidation as and when they are realized

-- following not be included in the liquidation estate

assets-not be used for recovery in the liquidation:
# assets owned by a third party which are in possession
of the CD,
# assets in security collateral held by financial services
providers and are subject to netting and set-off in multi-
lateral trading or clearing transactions;
# personal assets of any shareholder or partner of a CD
as the case may be provided such assets are not held on
account of avoidance transactions that may be avoided
under this Chapter;
# assets of any Indian or foreign subsidiary of the CD; or
# any other assets specified by the Board, including
assets which could be subject to set-off on account of
mutual dealings between the CD and any creditor
Section 38 Consolidation of  Liquidator receive or collect claims of creditors within a
claims period of thirty days from the date of the commencement
of the liquidation process
 Submission of claim by:
-- FC by providing a record of such claim with an
information utility

14
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

-- OC along with such supporting documents required to
prove the claim specified by the Board
 Creditor may withdraw or vary his claim within fourteen
days of its submission
Section 39 Verification of  Liquidator verify the claims submitted within time specified
claims by the Board
Section 40 Admission or  Liquidator after verification of claims either admit or reject
rejection of claims the claim, in whole or in part, as the case may be
--rejection of claim- record in writing the reasons
 Liquidator- communicate his decision of admission or
rejection of claims to the creditor and CD within seven
days of admission or rejection
Section 42 Appeal against the  Creditor may appeal to the AA against the decision of the
decision of liquidator accepting or rejecting the claims within fourteen
liquidator days of the receipt of such decision
Section 43 Preferential  Where the liquidator or the resolution professional, as the
transactions and case may be, is of the opinion that the CD has at a
relevant time relevant time given a preference in transactions to any
persons he shall apply to the AA for avoidance of
preferential transactions
 CD shall be deemed to have given a preference, if:
-- there is a transfer of property or an interest of the CD
for the benefit of a creditor or a surety or a guarantor for
or on account of an antecedent financial debt or
operational debt or other liabilities owed by the CD; and
--the transfer has the effect of putting such creditor or a
surety or a guarantor in a beneficial position than it would
have been in the event of a distribution of assets
 Preference shall be deemed to be given at a relevant
time, if:
-- it is given to a related party (other than by reason only
of being an employee), during the period of two years
preceding the insolvency commencement date; or
--a preference is given to a person other than a related
party during the period of one year preceding the
insolvency commencement date.
Section 45 Avoidance of  Transaction be considered undervalued where the CD:
undervalued --makes a gift to a person; or
transactions --enters into a transaction with a person which involves
the transfer of one or more assets by the CD for a
consideration the value of which is significantly less than
the value of the consideration provided by the CD, and
such transaction has not taken place in the ordinary
course of business of the CD
 If the liquidator or the resolution professional on an
examination of the transactions of the CD determines that
certain transactions were made during the relevant period
which were undervalued, he shall make an application to
the AA to declare such transactions as void and reverse

15
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

the effect of such transaction
Section 46 Relevant period for  Application for avoiding a transaction at undervalue, the
avoidable liquidator or the resolution professional demonstrate that:
transactions --such transaction was made with any person within the
period of one year preceding the insolvency
commencement date; or
--such transaction was made with a related party within
the period of two years preceding the insolvency
commencement date
Section 49 Transactions  Where the CD has entered into an undervalued
defrauding transaction and the AA is satisfied that such transaction
creditors was deliberately entered into by such CD:
--for keeping assets of the CD beyond the reach of any
person who is entitled to make a claim against the CD; or
--in order to adversely affect the interests of such a
person in relation to the claim,
 Authority shall make an order:
--restoring the position as it existed before such
transaction as if the transaction had not been entered
into; and
--protecting the interests of persons who are victims of
such transactions
 Order ofAA shall not:
--affect any interest in property which was acquired from a
person other than the CD and was acquired in good faith,
for value and without notice of the relevant circumstances,
or affect any interest deriving from such an interest, and
-- require a person who received a benefit from the
transaction in good faith, for value and without notice of
the relevant circumstances to pay any sum unless he was
a party to the transaction
Section 50 Extortionate credit  If CD has been a party to an extortionate credit
transactions transaction involving the receipt of financial or operational
debt during the period within two years preceding the
insolvency commencement date, the liquidator or the
resolution professional as the case may be, may make an
application for avoidance of such transaction to the AA if
the terms of such transaction required exorbitant
payments to be made by the CD
Section 53 Distribution of  Proceeds from the sale of the liquidation assets shall be
assets distributed in order of priority as under:
-- the insolvency resolution process costs and the
liquidation costs paid in full;
-- debts which shall rank equally between and among the
following:
# workmen’s dues for the period of twenty-four months
preceding the liquidation commencement date; and
# debts owed to a secured creditor in the event such
secured creditor has relinquished security;

16
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

--wages and any unpaid dues owed to employees other
than workmen for the period of twelve months preceding
the liquidation commencement date;
--financial debts owed to unsecured creditors;
-- following dues shall rank equally between and among
the following:
# any amount due to the Central Government and the
State Government including the amount to be received on
account of the Consolidated Fund of India and the
Consolidated Fund of a State, if any, in respect of the
whole or any part of the period of two years preceding the
liquidation commencement date;
# debts owed to a secured creditor for any amount
unpaid following the enforcement of security interest;
-- any remaining debts and dues;
--preference shareholders, if any; and
--equity shareholders or partners, as the case may be
Section 54 Dissolution of CD  Assets of the CD when completely liquidated, the
liquidator make an application to the AA for the dissolution
of CD
 Authority shall on application filed by the order that the
CD shall be dissolved from the date of that order and the
CD shall be dissolved
 Copy of an order shall within seven days from the date of
such order, be forwarded to the AA with which the CD is
registered
Section CDs eligible for  Application for initiating PPIRP- against CD classified as a
54A pre-packaged micro, small or medium enterprise; if:
insolvency -- it has not undergone pre-packaged insolvency
resolution process resolution process or completed CIRP, as the case may
be, during the period of three years preceding the
initiation date;
--it is not undergoing a CIRP;
--no order requiring it to be liquidated is passed;
--it is eligible to submit a resolution plan under section
29A;
--FCs not being related parties of CD, have proposed the
name of the insolvency professional to be appointed as
resolution professional for conducting the PPIRP, and the
FCs, not being related parties of the CD, representing not
less than sixty-six per cent in value of the financial debt
due to such creditors, have approved such proposal;
--majority of the directors or partners of the CD, as the
case may be, have made a declaration stating that:
# CD shall file an application for initiating PPIRP within
a definite time period not exceeding ninety days;
# the PPIRP is not being initiated to defraud any person;
and
# the name of the insolvency professional proposed and

17
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

approved to be appointed as resolution professional;
# members of the CD have passed a special resolution,
or at least three-fourth of the total number of partners, as
the case may be, of the CD have passed a resolution,
approving the filing of an application for initiating PPIRP
 CD shall obtain an approval from its FCs, not being its
related parties, representing not less than sixty-six per
cent in value of the financial debt due to such creditors,
for the filing of an application for initiating PPIRP
 Prior to seeking approval from FCs, the CD shall provide
them with:
--declaration as mentioned above;
--special resolution or resolution;
--a base resolution plan and such other conditions as may
be specified; and
--such other information and documents as may be
specified
Section Application to  Corporate applicant may file an application with the AA for
54C initiate initiating PPIRP
prepackaged  Along with application following be furnished:
insolvency --declaration, special resolution or resolution, as the case
resolution process may be, and the approval of FCs for initiating PPIRP;
--name and written consent of the insolvency professional
proposed to be appointed as resolution professional;
--a declaration regarding the existence of any transactions
of the CD that may be within the scope of provisions in
respect of avoidance of transactions or fraudulent or
wrongful trading;
--information relating to books of account of the CD and
such other documents relating to such period as may be
specified
 AA shall, within a period of fourteen days of the receipt of
the application, by an order:
-- admit the application, if it is complete; or
--reject the application, if it is incomplete:AA shall, before
rejecting an application, give notice to the applicant to
rectify the defect in the application within seven days from
the date of receipt of such notice
 PPIRP shall commence from the date of admission of the
application
Section Time-limit for  Be completed within a period of one hundred and twenty
54D completion of pre- days from the pre-packaged insolvency commencement
packaged date
insolvency  Resolution professional shall submit the resolution plan,
resolution process as approved by the CoC, to the AA within a period of
ninety days from the pre-packaged insolvency
commencement date
 If no resolution plan is approved by the CoC within the
time period the resolution professional shall, on the day

18
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

after the expiry of such time period, file an application with
the AA for termination of the PPIRP
Section Declaration of  AA shall:
54E moratorium and --declare a moratorium
public --appoint a resolution professional
announcement # as named in the application, if no disciplinary
during proceeding is pending against him; or
prepackaged # based on the recommendation made by the Board, if
insolvency any disciplinary proceeding is pending against the
resolution process insolvency professional named in the application
--cause a public announcement of the initiation of the
PPIRP to be made by the resolution professional
immediately after his appointment
 Order of moratorium shall have effect from the date of
such order till the date on which the PPIRP period comes
to an end
Section Duties and powers  Duties of resolution professional
54F of resolution --Confirm the list of claims submitted by the CD;
professional during --Inform creditors regarding their claims as confirmed;
prepackaged --Maintain an updated list of claims;
insolvency --Monitor management of the affairs of the CD;
resolution process --Inform the CoC in the event of breach of any of the
obligations of the Board of Directors or partners, as the
case may be, of the CD;
--Constitute the CoC and convene and attend all its
meetings;
--Prepare the information memorandum on the basis of
the preliminary information memorandum submitted and
any other relevant information;
--File applications for avoidance of transactions or
fraudulent or wrongful trading if any; and
--Such other duties as may be specified
 Powers of resolution professional:
-- access all books of accounts, records and information
available with the CD;
--access the electronic records of the CD from an
information utility having financial information of the CD;
--access the books of accounts, records and other
relevant documents of the CD available with Government
authorities, statutory auditors, accountants and such other
persons as may be specified;
--attend meetings of members, Board of Directors and
committee of directors, or partners, as the case may be,
of the CD;
--appoint accountants, legal or other professionals in such
manner as may be specified;
--collect all information relating to the assets, finances and
operations of the CD;
--take such other actions in such manner as may be

19
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

specified
Section Management of  Management of the affairs of the CD be vested in the
54H affairs of CD Board of Directors or the partners, as the case may be, of
the CD;
 Board of Directors or the partners, as the case may be, of
the CD, shall endeavour to protect and preserve the value
of the property of the CD, and manage its operations as a
going concern; and
 Exercise and discharge of contractual or statutory rights
and obligations of promoters, members, personnel and
partners, as the case may be, of the CD in relation to the
CD
Section 54I CoC  Resolution professional shall, within seven days of the
pre-packaged insolvency commencement date, constitute
a CoC, based on the list of claims
 First meeting of the CoC shall be held within seven days
of the constitution of the CoC
Section Vesting  If CoC, at any time during the PPIRP period, by a vote of
54J management of CD not less than sixty-six per cent of the voting shares,
with resolution resolves to vest the management of the CD with the
professional resolution professional, the resolution professional shall
make an application to the AA
 On an application if the AA is of the opinion that during
the PPIRP:
--the affairs of the CD have been conducted in a
fraudulent manner; or
--there has been gross mismanagement of the affairs of
the CD, it shall pass an order vesting the management of
the CD with the resolution professional
Section Consideration and  CD shall submit the base resolution plan, to the resolution
54K approval of professional within two days of the pre-packaged
resolution plan insolvency commencement date, and the resolution
professional shall present it to the CoC
 CoC may provide the CD an opportunity to revise the
base resolution plan prior to its approval or invitation of
prospective resolution applicants, as the case may be.
 CoC may approve the base resolution plan for submission
to the AA if it does not impair any claims owed by the CD
to the OCs
 If CoC does not approve the base resolution plan or it
impairs any claims owed by the CD to the OCs, the
resolution professional shall invite prospective resolution
applicants to submit a resolution plan, to compete with the
base resolution plan
 Resolution professional shall present to the CoC’s, for its
evaluation, resolution plans which conform to the
requirements
 CoC’s shall evaluate the resolution plans presented by
the resolution professional and select a resolution plan

20
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

from amongst them
 If the CoC’s decides that the resolution plans presented
by the resolution professional is significantly better than
the base resolution plan, such resolution plan may be
selected for approval
 If the resolution plan selected is not considered for
approval or does not fulfil the requirements it shall
compete with the base resolution plan and one of them
shall be selected for approval
 Resolution plan selected for approval as mentioned above
may be approved by the CoC’s for submission to the AA
# if the resolution plan selected for approval is not
approved by the CoC’s, the resolution professional shall
file an application for termination of the PPIRP
 Approval of resolution plan by the CoC’s, shall be by a
vote of not less than sixty-six per cent of the voting shares
Section Approval of  AA if satisfied that the resolution plan approved by the
54L resolution plan CoC’s meets the requirements it shall, within thirty days of
the receipt of such resolution plan, by order approve it
 If AA is satisfied that the resolution plan does not conform
to the requirements it may, within thirty days of the receipt
of such resolution plan, by an order, reject the resolution
plan and pass an order for termination of PPIRP
 where the AA has passed an order under section 54J(2)
and the resolution plan approved by the CoC’s under,
section 54K(4) or (12), as the case may be, does not
result in the change in the management or control of the
CD to a person who was not a promoter or in the
management or control of the CD, the AA shall pass an
order:
--rejecting such resolution plan;
--terminating the PPIRP and passing a liquidation order in
respect of the CD; and
--declaring that the PPIRP costs, if any, shall be included
as part of the liquidation costs for the purposes of
liquidation of the CD
Section Termination of pre-  If resolution professional files an application with the AA,
54N packaged the AA shall, within thirty days of the date of such
insolvency application, by an order:
resolution process --terminate the PPIRP; and
--provide for the manner of continuation of proceedings
initiated for avoidance of transactions or proceedings
initiated under fraudulent trading or wrongful trading and
fraudulent management of CD during PPIRP, if any
 Where the resolution professional, at any time after the
pre-packaged insolvency commencement date, but before
the approval of resolution plan intimates the AA of the
decision of the CoC’s, approved by a vote of sixty-six per
cent of the voting shares, to terminate the PPIRP, the AA

21
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

shall pass an order for the same
Section Initiation of CIRP  CoC’s, at any time after the pre-packaged insolvency
54O commencement date but before the approval of resolution
plan by a vote of sixty-six per cent of the voting shares,
may resolve to initiate a CIRP in respect of the CD, if such
CD is eligible for CIRP
 AA shall, within thirty days of the date of such intimation,
pass an order to:
--terminate the PPIRP and initiate CIRP against the CD;
--appoint the resolution professional referred to in under
clause (b) of sub-section (1) of section 54E as the interim
resolution professional, subject to submission of written
consent by such resolution professional to the
AdjudicatoryAA; and
--declare that the PPIRP costs, if any, shall be included as
part of insolvency resolution process costs for the
purposes of the CIRP of the CD
 If the resolution professional fails to submit written
consent the AA shall appoint an interim resolution
professional by making a reference to the Board for
recommendation
 Order of the AA shall:
-- be deemed to be an order of admission of an
application under section 7 and shall have the same
effect;
--CIRP shall commence from the date of such order;
-- proceedings initiated for avoidance of transactions or
proceedings initiated under section 66 and section 67A, if
any, shall continue during the CIRP;
--in computing the relevant time or the period for
avoidable transactions, the time-period for the duration of
the PPIRP shall also be included
Section 55 Fast track  Application for fast track CIRP may be made against the
corporation following CDs:
insolvency -- CD with assets and income below a level as may be
resolution process notified by the Central Government; or
--CD with such class of creditors or such amount of debt
as may be notified by the Central Government; or
--such other category of corporate persons as may be
notified by the Central Government
Section 56 Time period for  Be completed within a period of ninety days from the
completion of fast- insolvency commencement date
track CIRP  Resolution professional file an application to the AA to
extend the period if instructed to do so by a resolution
passed at a meeting of the CoC’s - supported by a vote of
seventy five percent of the voting share
 AA by order, extend the duration for further period not
exceeding forty-five days
 Extension shall not be granted more than once

22
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

Section 57 Manner of initiating  Application may be filed by a creditor or CD as the case
fast track CIRP may be, along with:
--proof of the existence of default as evidenced by records
available with an information utility or such other means
as may be specified by the Board; and
--such other information as may be specified by the Board
to establish that the CD is eligible for fast- track CIRP
Section 59 Voluntary  Corporate person who intends to liquidate itself voluntarily
liquidation of and has not committed any default may initiate voluntary
corporate persons liquidation proceedings
 Voluntary liquidation proceedings of a corporate person
registered as a company shall meet the following
conditions:
--declaration from majority of the directors of the company
verified by an affidavit stating that:
# they have made a full inquiry into the affairs of the
company and they have formed an opinion that either the
company has no debt or that it will be able to pay its debts
in full from the proceeds of assets to be sold in the
voluntary liquidation; and
# the company is not being liquidated to defraud any
person;
--above declaration be accompanied with:
# audited financial statements and record of business
operations of the company for the previous two years or
for the period since its incorporation, whichever is later;
# a report of the valuation of the assets of the company,
if any prepared by a registered valuer;
--within four weeks of a declaration:
# a special resolution of the members of the company in
a general meeting requiring the company to be liquidated
voluntarily and appointing an insolvency professional to act
as the liquidator; or
# a resolution of the members of the company in a
general meeting requiring the company to be liquidated
voluntarily as a result of expiry of the period of its duration,
if any, fixed by its articles or on the occurrence of any
event in respect of which the articles provide that the
company shall be dissolved, as the case may be and
appointing an insolvency professional to act as the
liquidator
If company owes any debt to any person, creditors
representing two thirds in value of the debt of the company
shall approve the resolution passed within seven days of
such resolution
 Company shall notify the Registrar and the Board about
the resolution to liquidate the company within seven days
of such resolution or the subsequent approval by the
creditors, as the case may be

23
The Insolvency & Bankruptcy Code, 2016–Section Summary

Section No. Section Heading Provisions

 Voluntary liquidation proceedings of a company be
deemed to commence from the date of passing of the
resolution
 Where the affairs of the corporate person have been
completely wound up, and its assets completely
liquidated, the liquidator shall make an application to the
AA for the dissolution of such corporate person
 Authority on application pass an order for dissolution of
CD from the date of that order
 A copy of order shall within fourteen days from the date of
such order, be forwarded to the AA with which the
corporate person is registered
Section 60 AA for corporate  NCLT -territorial jurisdiction over the place where the
persons registered office of the corporate person is located
Section 61 Appeals and  Person aggrieved by the order of the AA may prefer an
AppellateAA appeal to the NCLAT
 Appeal shall be filed within thirty days -NCLAT may allow
appeal to be filed after expiry of the said period -for period
not exceed fifteen days
 Appeal against an order approving a resolution plan under
section 31 may be filed on the following grounds:
--the approved resolution plan is in contravention of the
provisions of any law for the time being in force;
--there has been material irregularity in exercise of the
powers by the resolution professional during the corporate
insolvency resolution period;
--the debts owed to OCs of the CD have not been
provided for in the resolution plan in the manner specified
by the Board;
--the insolvency resolution process costs have not been
provided for repayment in priority to all other debts; or
--the resolution plan does not comply with any other
criteria specified by the Board
 Appeal against a liquidation order be filed on grounds of
material irregularity or fraud committed in relation to such
a liquidation order
 Appeal against an order for initiation of CIRP be filed on
grounds of material irregularity or fraud committed in
relation to such an order
Section 62 Appeal to Supreme  Person aggrieved by order of the NCLAT -file an appeal
Court to the Supreme Court on a question of law arising out of
such order within forty-five days from the date of receipt of
such order
 Extension by the Supreme Court for a further period not
exceeding fifteen days

24