The insolvency resolution process (IRP) is a one under the Insolvency and Bankruptcy Code, 2016, where the National Company Law Tribunal (NCLT) initiates a corporate insolvency resolution process (CIRP) when a company defaults on making payment to creditors. A financial creditor, operational creditor or corporate itself can file an application before NCLT for initiating IRP when default has occurred. In case of housing project, after amendment in the code, a homebuyer can also approach NCLT for initiating IRP if a developer fails to provide possession of the house or refund the money.
Under IRP, an interim resolution professional is appointed with the power to take charge of the company which has defaulted. The professional’s task is to take necessary steps to revive the company. Appointed professional also has the power to raise fresh funds to continue operations.
The IRP is granted 180 days to find a resolution, which can be extended by 90 days. If the IRP fails to find a resolution by then, the company is liquidated to pay the creditors.