Insolvency and Bankruptcy Code, 2016: Corporate Insolvency Resolution Process (CIRP)

The Corporate Insolvency Resolution Process (CIRP) is a process under the Insolvency and Bankruptcy Code, 2016 (IBC) for resolving insolvency and bankruptcy cases of companies and limited liability partnerships. The CIRP is a time-bound process, which is initiated by the creditors of the corporate debtor and is overseen by the National Company Law Tribunal (NCLT).

The CIRP has the following objectives:

  • To protect the interests of all stakeholders, including creditors, employees, and investors.
  • To revive the corporate debtor as a going concern.
  • To maximize the value of the assets of the corporate debtor.
  • To promote entrepreneurship and economic growth.

The CIRP is a 180-day process, which can be extended by the NCLT for a further period of 90 days. The CIRP can be initiated by the following entities:

  • The creditors of the corporate debtor.
  • The corporate debtor itself.
  • The Government.
  • The Registrar of Companies.

The CIRP is divided into the following stages:

  1. Admission stage: In this stage, the NCLT decides whether to admit the CIRP petition.
  2. CIRP initiation stage: In this stage, the NCLT appoints an insolvency professional to act as the resolution professional.
  3. Information gathering stage: In this stage, the resolution professional gathers information about the corporate debtor and its assets.
  4. Identification of potential resolution applicants: In this stage, the resolution professional identifies potential resolution applicants.
  5. Submission of resolution plans: In this stage, the resolution applicants submit their resolution plans to the resolution professional.
  6. Evaluation of resolution plans: In this stage, the resolution professional evaluates the resolution plans submitted by the resolution applicants.
  7. Resolution plan approval: In this stage, the committee of creditors (CoC) approves the resolution plan.
  8. Implementation of resolution plan: In this stage, the resolution plan is implemented.

If the CIRP is successful, the corporate debtor is revived as a going concern. If the CIRP is unsuccessful, the corporate debtor is liquidated.

Here are some MCQs on the Insolvency and Bankruptcy Code, 2016:

  1. What is the objective of the Corporate Insolvency Resolution Process (CIRP)?
    • To protect the interests of all stakeholders, including creditors, employees, and investors.
    • To revive the corporate debtor as a going concern.
    • To maximize the value of the assets of the corporate debtor.
    • All of the above
    • The answer is All of the above. The CIRP has the objective of protecting the interests of all stakeholders, reviving the corporate debtor as a going concern, and maximizing the value of the assets of the corporate debtor.
  2. What are the entities that can initiate the CIRP?
    • The creditors of the corporate debtor.
    • The corporate debtor itself.
    • The Government.
    • The Registrar of Companies.
    • The answer is The creditors of the corporate debtor, the corporate debtor itself, the Government, and the Registrar of Companies.
  3. What is the time-frame for the CIRP?
    • 180 days
    • 365 days
    • 540 days
    • 720 days
    • The answer is 180 days. The CIRP is a 180-day process, which can be extended by the NCLT for a further period of 90 days.