The Corporate Insolvency Resolution Process (CIRP) is one of the most critical mechanisms under India’s Insolvency and Bankruptcy Code (IBC), 2016. It provides a structured, time-bound way to rescue financially distressed companies, protect creditors’ interests, and revive viable businesses. As corporate debt continues to rise, CIRP has become a common and essential tool for restructuring and insolvency management.

This blog explains what CIRP is, how it works, the roles of each stakeholder, and why businesses must understand the process.

What Is Corporate Insolvency Resolution Process (CIRP)?

CIRP is a legal procedure initiated when a company (corporate debtor) defaults on repayment of debt. It aims to either revive the company through a resolution plan or liquidate its assets in an orderly manner when revival is not feasible.

CIRP can be initiated by:

• Financial Creditors

• Operational Creditors

• The Corporate Debtor itself

Once admitted by the National Company Law Tribunal (NCLT), the process must generally be completed within 180 days, extendable to 330 days in special cases.

Why CIRP Matters for Businesses

• Ensures timely resolution of insolvency

• Prevents liquidation of viable companies

• Protects interests of lenders, employees & shareholders

• Promotes transparency and accountability

• Strengthens India’s financial and investment ecosystem

• Encourages responsible corporate governance

CIRP has significantly enhanced India’s ranking in global ease-of-business and insolvency recovery mechanisms.

Step-by-Step Corporate Insolvency Resolution Process

1. Filing an Application with NCLT

A creditor or the corporate debtor files a petition before the National Company Law Tribunal, providing proof of debt and default. If satisfied, the NCLT admits the application and initiates CIRP.

2. Appointment of the Interim Resolution Professional (IRP)

Once CIRP begins:

• The NCLT appoints an Interim Resolution Professional (IRP)

• The IRP takes control of the business operations

• The company’s Board of Directors is suspended

• A public announcement is made inviting claims from creditors

3. Moratorium Period Begins

A critical part of CIRP is the moratorium, during which:

• No legal proceedings can be initiated or continued against the company

• No assets can be transferred or disposed

• No action can be taken to foreclose or recover assets

This offers breathing space to revive the business.

4. Verification of Claims

The IRP collects and verifies claims submitted by:

• Financial creditors

• Operational creditors

• Employees & workmen

• Government authorities

This forms the basis for decision-making during CIRP.

5. Formation of the Committee of Creditors (CoC)

The IRP constitutes the Committee of Creditors, comprising all financial creditors. The CoC:

• Votes on key decisions

• Approves or rejects resolution plans

• Can replace the IRP with a Resolution Professional (RP)

The RP then manages the entire resolution process.

6. Preparation and Submission of Resolution Plans

Potential investors, known as Resolution Applicants, submit plans to revive the company. A resolution plan may include:

• Debt restructuring

• New funding

• Change in management

• Sale of assets

• Operational overhaul

7. Evaluation and Approval by CoC

The CoC evaluates resolution plans based on:

• Feasibility

• Viability

• Repayment structure

• Long-term sustainability

A resolution plan is approved only if 66% voting share of the CoC agrees.

8. Approval by NCLT

Once the CoC approves a plan, it is submitted to the NCLT. If approved by the tribunal, it becomes binding on all stakeholders, and the company proceeds with the revival plan.

9. Liquidation (If No Resolution Plan Succeeds)

If:

• No resolution plan is approved within the stipulated time

• The CoC decides liquidation

• NCLT rejects the resolution plan

Then, the company enters liquidation under the supervision of a liquidator.

Key Stakeholders in CIRP

1. Corporate Debtor

The company undergoing insolvency proceedings.

2. Financial Creditors

Banks, NBFCs, and other lenders with financial loans.

3. Operational Creditors

Suppliers, vendors, employees, and service providers.

4. IRP/RP

Professionals who manage the insolvency process and ensure compliance.

5. Committee of Creditors (CoC)

Decision-making body controlling the future of the corporate debtor.

6. NCLT

Judicial authority overseeing the process.

Benefits of CIRP for Businesses and Creditors

• Time-bound resolution reduces delays

• Transparent process ensures fair treatment

• Possibility of revival rather than shutting down

• Better asset value realization for creditors

• Creation of a rescue-friendly business environment

CIRP has helped major Indian companies—from real estate firms to manufacturing giants—find new management, repay debts, and revive operations.

Conclusion

The Corporate Insolvency Resolution Process is a powerful tool under the Insolvency and Bankruptcy Code that protects both businesses and creditors. By offering a structured, time-bound, and transparent mechanism, CIRP promotes stability in the financial system and ensures viable companies get a second chance.