How to file a CIRP application under IBC (Sections 7, 9 and 10)

The Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC) is the legal process through which an insolvent or defaulting company undergoes a structured resolution process for the benefit of its creditors. CIRP can be initiated under Section 7 by a financial creditor, Section 9 by an operational creditor, or Section 10 by the corporate debtor itself. Each provision has different eligibility requirements, filing procedures and legal defences. Understanding the CIRP filing requirements, minimum default threshold and applicable provisions under the IBC is essential because choosing the wrong provision or filing before the statutory requirements are satisfied can lead to rejection of the insolvency application.

The common threshold

Section 4 of the Code fixes the entry point. By notification S.O. 1205(E) dated 24 March 2020, issued under the proviso to Section 4, the Central Government specified one crore rupees as the minimum amount of default. Below that figure, the Adjudicating Authority — the National Company Law Tribunal — has no jurisdiction to entertain an application under Part II.

Section 238A applies the Limitation Act, 1963 to proceedings under the Code, so a claim on which limitation has expired cannot be revived by filing an insolvency application.

A further bar operates on a defined period. Section 10A prohibits the filing of an application under Sections 7, 9 or 10 in respect of a default arising during the period it specifies, beginning 25 March 2020, and provides that no application shall ever be filed for such a default.

Section 7: application by a financial creditor

A financial creditor is one to whom a financial debt — as defined in Section 5(8), a debt disbursed against the consideration for the time value of money — is owed. Banks, financial institutions, debenture holders, lessors under a finance lease and, in the specified circumstances, allottees under a real estate project fall within it.

The application is made in Form 1 prescribed under the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, accompanied by the record of default — from an information utility or such other evidence as the Rules specify — the name of the proposed interim resolution professional, and the documents establishing the debt and the default.

For financial creditors in a class, notably allottees under a real estate project, Section 7 requires the application to be filed jointly by not less than one hundred such creditors in the same class or not less than ten per cent of their total number, whichever is less.

Crucially, no demand notice is required. A financial creditor may apply on default without any prior statutory notice.

Sections 8 and 9: application by an operational creditor

An operational debt, under Section 5(21), is a claim in respect of the provision of goods or services, including employment dues and statutory dues. Suppliers, service providers, employees and government departments are typically operational creditors.

Here a two-stage process applies, and the first stage is mandatory.

Stage one — the demand notice under Section 8. On the occurrence of a default, the operational creditor delivers a demand notice, or a copy of an invoice demanding payment, in the form prescribed by the Rules. The corporate debtor then has ten days to bring to the creditor’s notice the existence of a dispute, or to make payment.

Stage two — the application under Section 9. If neither payment nor notice of dispute is received within ten days, the operational creditor may apply in Form 5, supported by the invoices or demand notice, an affidavit that no notice of dispute was received, and a certificate from a financial institution maintaining the creditor’s accounts confirming non-payment, where such a certificate is required.

The dispute filter is decisive. In Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd., (2018) 1 SCC 353, the Supreme Court held that where the corporate debtor raises a plausible contention requiring further investigation, and the dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence, the application must be rejected. The Court emphasised that the Code is not intended as a substitute for a debt recovery forum. The dispute must, however, pre-date the demand notice.

Section 10: application by the corporate debtor

A company that has committed a default may itself initiate the process, applying in Form 6 with the requisite internal authorisation, a record of the default, and information about its financial position and the proposed resolution professional. Section 11 disqualifies certain applicants, including a corporate debtor already undergoing CIRP and one in respect of which a resolution plan was approved within the preceding twelve months.

What the Tribunal does with the application

Section 7(5) provides that where the Adjudicating Authority is satisfied that a default has occurred, the application is complete, and no disciplinary proceeding is pending against the proposed resolution professional, it may admit the application. Section 9(5) uses “shall” in the corresponding provision for operational creditors.

That difference in wording generated genuine uncertainty. In Vidarbha Industries Power Ltd. v. Axis Bank Ltd., (2022) 8 SCC 352, decided on 12 July 2022, the Supreme Court held that “may” in Section 7(5)(a) confers a discretion, so that the Tribunal could decline to admit even where debt and default were established; a review petition was dismissed. That reading sat uneasily with earlier authority, including Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407, and E.S. Krishnamurthy v. Bharath Hi-Tech Builders (P) Ltd., (2022) 3 SCC 161. In M. Suresh Kumar Reddy v. Canara Bank, Civil Appeal No. 7121 of 2022, decided on 11 May 2023, the Supreme Court confined Vidarbha to the peculiar facts before it and reaffirmed the earlier position. Practitioners should treat the discretion as narrow and fact-specific rather than general.

If the application is defective, the Tribunal gives an opportunity to rectify within the period the Code allows before rejecting it.

What follows admission

Admission triggers consequences that are difficult to reverse. A moratorium under Section 14 halts suits, execution, enforcement of security and transfer of assets. An interim resolution professional takes over the management, and the powers of the board stand suspended. A committee of creditors is constituted, claims are invited and verified, and resolution plans are sought.

Section 12 sets the timeline: 180 days, extendable by up to 90 days, with an outer limit of 330 days including any time spent in legal proceedings. Where no plan is approved, liquidation follows.

Withdrawal after admission is possible but not easy. Section 12A permits withdrawal only with the approval of ninety per cent of the voting share of the committee of creditors.

Key checks before filing a CIRP application under IBC

Three checks are worth running before an CIRP application is drafted under IBC. Is the amount in default at least one crore rupees as at the date of filing — bearing in mind that a part-payment reducing it below the threshold defeats the application? Is the claim within limitation? And, for an operational creditor, is there anything on the record — a prior email, a quality complaint, a pending suit or arbitration — that the corporate debtor can point to as a pre-existing dispute?

An application filed to apply commercial pressure in a genuinely disputed claim is unlikely to be admitted, and may attract adverse consequences for the applicant.

FAQs

1. What is CIRP under the IBC?

CIRP is the Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016, used to resolve insolvency of a corporate debtor.

2. Who can initiate CIRP?

CIRP can be initiated by a financial creditor under Section 7, an operational creditor under Section 9, or the corporate debtor under Section 10.

3. What is the minimum default amount for CIRP?

The minimum default threshold for initiating CIRP is ₹1 crore, subject to the applicable provisions and notifications under the IBC.

4. Is a demand notice required before filing CIRP?

A Section 8 demand notice is mandatory for an operational creditor before filing under Section 9. A financial creditor filing under Section 7 does not need to issue a statutory demand notice.

5. Can CIRP be initiated if the debt is disputed?

For an operational creditor, a genuine pre-existing dispute can prevent admission of a Section 9 application. The IBC cannot be used simply as a debt recovery mechanism.

6. What happens after a CIRP application is admitted?

Admission triggers the moratorium, suspension of the corporate debtor’s management, appointment of an interim resolution professional and constitution of the committee of creditors.

Legal Information Disclaimer

This article is published for general legal information and educational purposes only. It reflects the position of Indian law as researched up to 10 August 2026 and may not account for subsequent amendments, notifications, rule changes or judicial developments. It is not legal advice, does not take into account any individual’s particular facts or circumstances, and no advocate-client relationship arises from reading it. Outcomes in litigation depend on the specific facts of each case and on procedural requirements in force at the relevant time. Readers dealing with an actual dispute should obtain independent professional advice from a qualified advocate of their own choosing before acting on any information contained here.

Sources / Authorities

• Insolvency and Bankruptcy Code, 2016 — Sections 4, 5(8), 5(21), 7, 8, 9, 10, 10A, 11, 12, 12A, 14 and 238A — India Code, https://www.indiacode.nic.in
• Notification S.O. 1205(E) dated 24 March 2020, Ministry of Corporate Affairs, issued under the proviso to Section 4 — one crore rupees specified as the minimum amount of default
• Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 — Forms 1, 3, 4, 5 and 6
• Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd., (2018) 1 SCC 353 — existence of a pre-existing dispute; the Code is not a recovery forum
• Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407
• Vidarbha Industries Power Ltd. v. Axis Bank Ltd., (2022) 8 SCC 352, decided 12 July 2022 — discretion under Section 7(5)(a); review dismissed
• E.S. Krishnamurthy v. Bharath Hi-Tech Builders (P) Ltd., (2022) 3 SCC 161
• M. Suresh Kumar Reddy v. Canara Bank, Civil Appeal No. 7121 of 2022, decided 11 May 2023 — Vidarbha confined to its facts