Insolvency and Bankruptcy Code, 2016: Time – Limit for completion of Insolvency Resolution Process and withdrawal of application admitted under the Code

Here are the notes on the time limit for completion of the insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC):

  • Section 12 of the IBC sets out the time limit for completion of the CIRP. It states that the CIRP shall be completed within a period of 180 days from the date of admission of the application to initiate such process.
  • However, the resolution professional may apply to the Adjudicating Authority for an extension of the CIRP period by a further period of not exceeding 90 days, if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of 75% of the voting shares.
  • The Adjudicating Authority may grant an extension of the CIRP period if it is satisfied that the subject matter of the case is such that the CIRP cannot be completed within 180 days.
  • The maximum extension that can be granted for the CIRP period is 270 days (180 days + 90 days).
  • If the CIRP is not completed within the extended period of 270 days, the Adjudicating Authority shall order liquidation of the corporate debtor.

Here are some MCQs on the time limit for completion of the CIRP:

  1. The time limit for completion of the CIRP is:
    • 180 days
    • 270 days
    • 360 days
    • 450 days
    • The answer is 180 days.
  2. The resolution professional may apply to the Adjudicating Authority for an extension of the CIRP period by a further period of:
    • 30 days
    • 60 days
    • 90 days
    • 120 days
    • The answer is 90 days.
  3. The Adjudicating Authority may grant an extension of the CIRP period if it is satisfied that:
    • The corporate debtor is a small business enterprise
    • The corporate debtor is a start-up
    • The subject matter of the case is such that the CIRP cannot be completed within 180 days
    • The corporate debtor has made a settlement with its creditors
    • The answer is The subject matter of the case is such that the CIRP cannot be completed within 180 days.
  4. If the CIRP is not completed within the extended period of 270 days, the Adjudicating Authority shall order:
    • Liquidation of the corporate debtor
    • A fresh CIRP
    • A compromise with the creditors
    • A settlement with the creditors
    • The answer is Liquidation of the corporate debtor.