Tribunals

Application by Financial Creditor to Initiate CIRP under Section 7 IBC

This is the prescribed application by which a financial creditor initiates the Corporate Insolvency Resolution Process (CIRP) against a corporate debtor before the National Company Law Tribunal (NCLT). It is the primary legal instrument for a creditor to establish a default in the repayment of a financial debt and seek a resolution of the debtor's insolvency.

The application is filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the IBC (Application to Adjudicating Authority) Rules, 2016. The filing must strictly adhere to the format prescribed in Form 1 of the said Rules.

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Governing law
Insolvency and Bankruptcy Code 2016 s.7 + IBC (Application to Adjudicating Authority) Rules 2016 Rule 4
Sections
s. Section 7, IBC 2016s. Rule 4, IBC (Application to Adjudicating Authority) Rules 2016s. Form 1, IBC (Application to Adjudicating Authority) Rules 2016s. Section 14, IBC 2016
Filed before
National Company Law Tribunal (NCLT)

When this is the right filing

  • When a corporate debtor has committed a default in repayment of a financial debt owed to a bank, NBFC, debenture holder, or other financial creditor.
  • To initiate CIRP for defaults on secured or unsecured financial facilities, including term loans, working-capital facilities, bonds, debentures, and invoked guarantees.
  • When the financial creditor has evidence of the debt and the default, and seeks the appointment of an Interim Resolution Professional and a moratorium under Section 14 of the IBC.
  • Do not use this application if the debt is an operational debt owed to a supplier or service provider; that requires a separate application under Section 9 of the IBC.

What the court looks for

  • Complete particulars of the financial creditor as the applicant, including its legal status and authorisation to file.
  • Accurate identification and particulars of the corporate debtor against whom the process is initiated.
  • A clear record of the financial debt, including the amount, date of default, and the nature of the facility, establishing the default is unequivocal.
  • The name and written consent (in Form 2) of a proposed Interim Resolution Professional who is registered with the Insolvency and Bankruptcy Board of India and not disqualified.
  • A properly structured prayer for the initiation of CIRP, declaration of a moratorium, and appointment of the proposed resolution professional.

The structure the court expects

The components of the filed format, in the order they appear. LexPilot fills every one of them from your facts and papers.

  1. 1Part – i — particulars of the applicant (financial creditor)
  2. 2Part – ii — particulars of the corporate debtor
  3. 3Part – iii — particulars of the proposed interim resolution professional
  4. 4Part – iv — particulars of the financial debt
  5. 5Certification
  6. 6Relief(s) sought
  7. 7List of annexures
  8. 8Form no. nclt 6
How it opens
I/We hereby certify that the proposed Interim Resolution Professional named in Part III above is duly qualified, registered with the Insolvency and Bankruptcy Board of India, and not disqualified under the Code or the Regulations thereunder, and has given written consent in Form 2.

Bracketed items are filled from your case.

Frequently asked questions

What constitutes a 'financial debt' for the purpose of this application?

A financial debt is a debt along with interest, if any, which is disbursed against the consideration for the time value of money. It includes money borrowed against the payment of interest, amounts raised through bonds or debentures, and liabilities under a guarantee for any such items.

Is the written consent of the proposed Interim Resolution Professional mandatory at the time of filing?

Yes. The application requires the financial creditor to propose a name for appointment as the Interim Resolution Professional. The application must be accompanied by the professional's written consent in Form 2, confirming their registration with the IBBI and eligibility under the Code.

What is the effect of filing this application on other recovery proceedings?

Upon admission of the application, the NCLT declares a moratorium under Section 14 of the IBC. This prohibits the institution or continuation of suits or proceedings against the corporate debtor, the transfer of its assets, and any action to enforce security interests, effectively staying other recovery actions.

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