The Insolvency Resolution Process (IRP), established under the Insolvency and Bankruptcy Code of 2016, is a critical mechanism for companies facing financial distress. The National Company Law Tribunal (NCLT) initiates a Corporate Insolvency Resolution Process (CIRP) when a company defaults on payments to its creditors. Applications for initiating IRP can be filed by financial creditors, operational creditors, or the company itself. Notably, recent amendments allow homebuyers to file for IRP if a housing developer fails to deliver possession or refund their payments, expanding the scope of the process.

Once IRP is initiated, an interim resolution professional is appointed to manage the distressed company's operations. This professional holds significant authority, including the ability to raise fresh funds to support ongoing operations. The IRP is granted a time frame of 180 days to seek a viable resolution for the company's financial troubles, which can be extended by an additional 90 days if necessary. If no resolution is found within this period, the company is subject to liquidation, thus prioritizing creditor payments.

The streamlined approach of the IRP aims to enhance the efficiency of the insolvency process while protecting the interests of various stakeholders involved. In a recent circular, the Insolvency and Bankruptcy Board of India (IBBI) announced changes to the reporting framework, reducing the existing nine forms to five. This restructuring is intended to eliminate duplication and simplify data requirements, leveraging technology for smoother operations. As the IRP continues to evolve, it remains a vital tool for addressing corporate insolvency in India, balancing the needs of creditors with the potential for corporate recovery.