Amendment to Sec 12 of Insolvency & Bankruptcy Code,2016 (IBC)

Extension of time for completion of Insolvency Resolution Process (IRP)

Corporate Insolvency Resolution Process (CIRP) is initiated by the National Company Law Tribunal when a company defaults on making payment to its creditors.

As per Section 12(1) of Insolvency & Banking Code, 2016, CIRP shall be completed within a period of 180 days from the date of admission of the application to initiate such process.

• The resolution professional shall file an application to the Adjudicating Authority (AA) to extend the period of the CIRP beyond 180 days, if resolution is passed at a meeting of the committee of creditors by a vote of 75% of the voting shares.
• On receipt of an application, if the AA is satisfied that the case is such that CIRP cannot be completed within 180 days, it may order to extend the duration of such process beyond 180 days, but not exceeding 90 days:

Provided that any extension of the period of CIRP shall not be granted more than once.

Amendment to section 12, by way of proviso, requires the completion of the CIRP within a maximum period of 330 days including any extension granted.

Therefore, the time limit of 180 days + 90 days remains unchanged and the intent is to provide an additional period of 60 days (330-270).

Provided also that where the IRP of Corporate debtor is pending and has not been completed within the period of 330 days, such process shall be completed within a period of 90 days from the date of commencement of IBC (Amendment) Act, 2019.