Corporate Insolvency Timeline Overview
The Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code follows a structured timeline designed to resolve corporate financial distress efficiently. This guide breaks down the complex process into simple, understandable phases.
Key Timeline Facts
Total Duration
- • Standard Timeline: 180 days
- • With Extension: Up to 270 days
- • Maximum Limit: 330 days (including litigation)
- • Fast Track: 90 days (for smaller companies)
Success Outcomes
- • Resolution: Company saved through restructuring
- • Acquisition: New investor takes over
- • Merger: Combined with another company
- • Liquidation: Assets sold, company closed
Simple Timeline Overview
Filing & Admission (0-14 days)
Creditor files petition, NCLT reviews and admits case
Moratorium & Setup (14-30 days)
Legal protection starts, Resolution Professional appointed
Resolution Process (30-180 days)
Finding buyers, negotiating deals, creditor voting
Implementation (180+ days)
Executing approved plan or proceeding to liquidation
What This Means for You
Understanding this timeline helps you prepare for what's coming and make informed decisions:
For Business Owners
Know when you lose control and when you might get it back
For Creditors
Understand when you can expect recovery or decisions
For Employees
Know your job security and when changes might happen
Complete Visual Flowchart
This comprehensive flowchart shows the entire journey of a corporate insolvency case, from the initial filing to final resolution, with all possible outcomes and decision points.
Interactive Timeline Flowchart
🚨 FINANCIAL CRISIS
Company cannot pay debts (₹1 crore+)
PHASE 1: PETITION FILING
Days 0-14
Creditor Files
Section 7 or 9 petition to NCLT
NCLT Reviews
Checks documents and eligibility
Admission/Rejection
NCLT decides to admit or reject
⚖️ DECISION POINT
Is petition admitted?
❌ REJECTED
- • Case dismissed
- • Company continues operations
- • Creditor may appeal or file fresh petition
- • Alternative recovery methods needed
✅ ADMITTED
- • CIRP begins immediately
- • Moratorium declared
- • Management loses control
- • Resolution Professional appointed
PHASE 2: MORATORIUM PERIOD
Days 14-30
🛡️ Legal Protection
- • No new lawsuits allowed
- • Existing cases suspended
- • Assets cannot be seized
- • No loan recoveries
👨💼 New Management
- • Resolution Professional takes control
- • Board of Directors suspended
- • Day-to-day operations continue
- • Employee jobs protected
PHASE 3: RESOLUTION PROCESS
Days 30-180 (extendable to 270)
📊 Asset Evaluation
Company assets valued and listed
🏢 Find Buyers
Invite bids from potential investors
🗳️ Creditor Voting
Creditors vote on resolution plans
Key Activities During This Phase:
- • Committee of Creditors formed
- • Information memorandum prepared
- • Expression of interest invited
- • Due diligence by potential buyers
- • Resolution plans submitted
- • Plans evaluated and compared
- • Creditor meetings and voting
- • NCLT approval sought
Phase 1: Petition Filing and Admission (Days 0-14)
The insolvency process begins when a creditor files a petition with NCLT. This phase determines whether the case will proceed to full insolvency proceedings or be dismissed.
Step-by-Step Process
Day 0: Petition Filed
- • Who Can File: Financial creditors, operational creditors, or the company itself
- • Minimum Amount: Default must be ₹1 crore or more
- • Required Documents: Proof of debt, default evidence, company details
- • Filing Fee: Varies based on company size and debt amount
- • What Happens: NCLT registry accepts the petition for initial review
Days 1-7: Initial Review
- • Document Check: NCLT verifies all required documents are submitted
- • Deficiency Notice: If documents missing, creditor gets time to cure defects
- • Company Notice: Company is informed about the petition
- • Public Notice: Notice published in newspapers
- • Hearing Date: NCLT schedules hearing date
Days 7-14: Hearing and Decision
- • Company Response: Company can file reply opposing the petition
- • Arguments: Both sides present their case to NCLT
- • NCLT Decision: Tribunal decides to admit or reject the petition
- • If Admitted: CIRP begins immediately with moratorium
- • If Rejected: Case dismissed, company continues normal operations
What This Means for Different Stakeholders
For Company Owners
- • Last chance to negotiate with creditors
- • Prepare defense if petition is wrong
- • Gather financial documents
- • Consider voluntary settlement
For Employees
- • Jobs are still secure during this phase
- • Company operations continue normally
- • Start preparing for potential changes
- • Understand your rights under IBC
For Other Creditors
- • Monitor the proceedings closely
- • Prepare your claims documentation
- • Consider joining the petition
- • Evaluate recovery prospects
Phase 2: Moratorium and Setup (Days 14-30)
Once NCLT admits the petition, a moratorium (legal protection) begins immediately. This phase focuses on stabilizing the company and setting up the resolution framework.
Immediate Changes After Admission
🛡️ Moratorium Protection
- • No New Lawsuits: Creditors cannot file new cases against the company
- • Existing Cases Suspended: All pending court cases are put on hold
- • Asset Protection: Company assets cannot be seized or sold
- • No Recoveries: Banks cannot recover loans through normal processes
- • Contract Protection: Essential contracts cannot be terminated
👨💼 Management Changes
- • Board Suspended: Company directors lose decision-making power
- • Resolution Professional: Independent professional takes control
- • Operations Continue: Business continues under new management
- • Employee Protection: Jobs and salaries are protected
- • Key Decisions: Only Resolution Professional can make major decisions
Key Activities in This Phase
Resolution Professional Tasks
- • Take control of company operations
- • Secure all company assets and records
- • Identify and verify all creditors
- • Prepare preliminary asset inventory
- • Ensure business continuity
- • Set up communication with stakeholders
Stakeholder Actions
- • Creditors submit their claims
- • Employees continue normal work
- • Suppliers assess contract status
- • Customers monitor service continuity
- • Investors evaluate opportunities
- • Legal teams prepare documentation
What Changes and What Doesn't
✅ What Continues
- • Daily business operations
- • Employee salaries and benefits
- • Essential supplier contracts
- • Customer service and deliveries
- • Utility services and rent
- • Regulatory compliance
❌ What Stops
- • Board of directors' powers
- • New borrowings or investments
- • Asset sales without approval
- • Loan repayments to creditors
- • Dividend payments
- • Major contract changes
Phase 3: Resolution Process (Days 30-180/270)
This is the main phase where the Resolution Professional works to find a buyer or restructuring plan to save the company. It's like putting the company up for sale to find the best offer that can pay creditors and keep the business running.
The Resolution Journey
📊 Step 1: Company Evaluation (Days 30-60)
- • Asset Valuation: Professional valuers assess all company assets
- • Financial Analysis: Detailed review of company's financial position
- • Business Assessment: Evaluation of business model and market position
- • Legal Review: Check all contracts, licenses, and legal issues
- • Information Memorandum: Comprehensive document prepared for potential buyers
🏢 Step 2: Finding Buyers (Days 60-120)
- • Public Advertisement: Invitation for Expression of Interest published
- • Interested Parties: Companies, investors, and individuals can express interest
- • Due Diligence: Serious buyers get access to detailed company information
- • Site Visits: Potential buyers visit company premises and operations
- • Preliminary Offers: Initial offers and terms discussed
📋 Step 3: Resolution Plans (Days 120-150)
- • Formal Proposals: Interested buyers submit detailed resolution plans
- • Payment Terms: How much they'll pay creditors and when
- • Business Plans: How they'll run the company going forward
- • Employee Protection: Plans for retaining jobs and benefits
- • Implementation Timeline: Step-by-step execution plan
🗳️ Step 4: Creditor Voting (Days 150-180)
- • Plan Evaluation: Committee of Creditors reviews all proposals
- • Comparison: Plans compared on payment amount, timeline, and feasibility
- • Voting Process: Creditors vote on the best plan (66% majority needed)
- • Plan Selection: Winning plan selected for NCLT approval
- • NCLT Approval: Tribunal reviews and approves the selected plan
Committee of Creditors (CoC)
The Committee of Creditors is like a board of directors made up of the company's major creditors. They make the key decisions during the resolution process.
Who's in the Committee
- • Financial Creditors: Banks, NBFCs (main voting members)
- • Operational Creditors: Suppliers (1 representative if total dues > ₹1 crore)
- • Employees: 1 representative if total dues > ₹1 crore
- • Voting Power: Based on the amount of money owed
What They Decide
- • Resolution Plans: Which plan to accept or reject
- • Timeline Extensions: Whether to extend the 180-day deadline
- • Asset Sales: Approval for selling company assets
- • Liquidation: Whether to close the company if no good plan
Possible Outcomes at End of This Phase
✅ Resolution Plan Approved
Company saved, new owner takes over, creditors get paid
⏰ Extension Granted
More time given to find better offers (up to 90 more days)
❌ No Viable Plan
Company goes to liquidation (closure and asset sale)
Phase 4: Implementation (Days 180+)
Once a resolution plan is approved, it's time to implement it. This means the new owner takes control and starts executing their plan to revive the company and pay creditors.
Implementation Process
🔄 Ownership Transfer
- • Legal Transfer: Company ownership legally transferred to new owner
- • Management Change: New management team takes control
- • Asset Transfer: All company assets transferred as per plan
- • License Transfer: Business licenses and permits transferred
- • Employee Transition: Employees informed about new management
💰 Creditor Payments
- • Payment Schedule: Creditors paid according to approved timeline
- • Priority Order: Employees and operational creditors paid first
- • Financial Creditors: Banks and financial institutions paid as per plan
- • Monitoring: Resolution Professional monitors payment compliance
- • Completion: Once payments made, CIRP officially ends
🏢 Business Revival
- • Operations Restart: Full business operations resume under new management
- • Investment: New owner invests money as promised in the plan
- • Job Security: Employee jobs secured as per resolution plan
- • Growth Plans: New business strategies implemented
- • Market Return: Company returns to normal market operations
Success Stories: What Good Implementation Looks Like
For the Company
- • Business operations stabilize and improve
- • New investments boost growth
- • Market confidence returns
- • Company becomes profitable again
- • Future expansion opportunities
For Stakeholders
- • Creditors recover significant portion of dues
- • Employees keep their jobs with better prospects
- • Suppliers get new business opportunities
- • Customers get continued service
- • Economy benefits from saved business
Alternative Path: Liquidation
If no viable resolution plan is found or approved, the company goes into liquidation. This means the company is closed down and its assets are sold to pay creditors. Think of it as closing a shop and selling everything to pay the debts.
When Does Liquidation Happen?
🚫 Triggers for Liquidation
- • No Resolution Plans: No one wants to buy or invest in the company
- • Plans Rejected: Creditors reject all submitted resolution plans
- • Time Expired: 270-day deadline passes without approval
- • Plan Failure: Approved plan fails during implementation
- • Creditor Decision: Creditors vote to liquidate instead of continuing
⚖️ NCLT Order
- • Liquidation Order: NCLT passes order to liquidate the company
- • Liquidator Appointment: Professional liquidator appointed to handle process
- • Asset Custody: All company assets come under liquidator's control
- • Employee Termination: All employees are terminated (with due compensation)
- • Business Closure: All business operations cease immediately
Liquidation Process
📋 Step 1: Asset Inventory and Valuation
- • Complete list of all company assets prepared
- • Professional valuation of all assets
- • Identification of secured and unsecured assets
- • Recovery of assets from third parties
🏷️ Step 2: Asset Sale
- • Public auction or private sale of assets
- • Sale of land, buildings, machinery, inventory
- • Recovery of money from debtors
- • Sale of intellectual property and licenses
💰 Step 3: Distribution of Money
Money from asset sales is distributed in this order:
- Liquidation costs and fees
- Employee wages and benefits (last 24 months)
- Secured creditors (banks with collateral)
- Employees (remaining dues)
- Unsecured creditors (suppliers, other lenders)
- Government dues (taxes, penalties)
- Shareholders (usually nothing left)
Impact of Liquidation
❌ Negative Impacts
- • All jobs are lost permanently
- • Company ceases to exist
- • Creditors usually recover less money
- • Economic value is destroyed
- • Suppliers lose a customer
- • Community loses employment
✅ Some Benefits
- • Creditors get some money back
- • Assets go to more productive uses
- • Employees get termination benefits
- • Market resources are freed up
- • Closure provides certainty
- • Prevents further losses
Practical Insights and Key Takeaways
Understanding the corporate insolvency timeline helps all stakeholders make better decisions and prepare for what's coming. Here are the key insights from real cases.
Success Factors
What Makes Cases Successful
- • Valuable Assets: Company has good assets that buyers want
- • Viable Business: Core business model is sound
- • Market Demand: Products/services still have market demand
- • Skilled Workforce: Employees with valuable skills
- • Good Location: Strategic location or infrastructure
- • Quick Action: Early filing before too much damage
What Leads to Liquidation
- • Obsolete Business: Outdated products or technology
- • Poor Assets: Assets with little market value
- • High Debt: Debt much higher than asset value
- • Legal Issues: Major legal or regulatory problems
- • Market Decline: Industry in permanent decline
- • Late Filing: Too much damage done before filing
Timeline Reality Check
📊 Actual vs. Planned Timelines
Admission
Planned: 14 days
Reality: 30-60 days
Resolution
Planned: 180 days
Reality: 270-330 days
Implementation
Planned: 30 days
Reality: 90-180 days
🎯 Success Rates
Resolution Success
45%
Cases end with successful resolution
Liquidation
35%
Cases end in liquidation
Ongoing
20%
Cases still in process
Key Advice for Stakeholders
For Business Owners
- • File early before situation worsens
- • Maintain good records and documentation
- • Cooperate fully with Resolution Professional
- • Consider voluntary filing if distressed
- • Seek professional advice early
For Employees
- • Understand your rights under IBC
- • Keep records of salary and benefits
- • Participate in creditor meetings
- • Look for alternative employment
- • Stay informed about case progress
For Creditors
- • File claims promptly and accurately
- • Participate actively in CoC meetings
- • Evaluate resolution plans carefully
- • Consider recovery vs. liquidation
- • Monitor implementation closely
Understanding the Journey
The corporate insolvency timeline under IBC is designed to give companies a second chance while protecting creditor interests. While the process can seem complex, understanding each phase helps stakeholders make informed decisions and maximize positive outcomes.
Success depends on early action, stakeholder cooperation, and finding the right balance between saving viable businesses and efficiently closing unviable ones. The timeline provides structure, but flexibility within that structure often determines success.
Whether you're a business owner, employee, creditor, or potential investor, knowing this timeline helps you prepare for what's ahead and make the best decisions for your situation.
Need Expert Guidance on Corporate Insolvency?
Navigating corporate insolvency requires expert legal guidance at every stage. Our experienced team provides comprehensive support for all stakeholders throughout the CIRP timeline, from initial filing to successful resolution or liquidation.
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