Priyanshi Garg
Quick Summary
Introduction Of the three routes into a Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 Sections 7, 9, and 10 - the operational creditor's route under Sections 8 and 9 is by far the most frequently invoked, and also the one most often dismissed at the
Daily Limit Reached
You have reached your daily limit of 2 Free Articles
Subscribe to CCI PRO for unlimited access
Why Upgrade to CCI PRO?
- No Ads
- WhatsApp Broadcasts
- Daily E-Newsletter
- Unlimited Articles Access
BEST VALUE
2 YEAR PLAN
3,499
(Inclusive of GST)
1 YEAR PLAN
1,999
(Inclusive of GST)
View all CCI PRO benfits
Already a PRO member? Login here for an ad-free experience.
FAQ :
An operational creditor is defined as a person owed an operational debt, which includes claims for goods or services provided, employment dues, or debts owed to the government. This typically covers unpaid vendors, suppliers, contractors, employees, and statutory authorities.
Section 8 requires an operational creditor to issue a formal demand notice to the corporate debtor for unpaid operational debt. The debtor then has 10 days to pay or provide a valid reply indicating a pre-existing dispute.
The 'pre-existing dispute' doctrine, established by Supreme Court precedent, means that if a genuine dispute regarding the debt existed before the demand notice was issued, the Section 9 application for CIRP will likely fail. The NCLT doesn't need to assess the dispute's merits, only its existence.
The 2026 amendment mandates reasons for delays in admission decisions, introduces an out-of-court Creditor-Initiated Insolvency Resolution Process (CIIRP), clarifies that security interests arise from contracts, and imposes a stricter regime for withdrawing admitted CIRP applications.
An application under Section 9 must be filed within three years from the date the cause of action arises, typically calculated from the expiry of the 10-day period following the Section 8 demand notice, as per Article 137 of the Limitation Act, 1963.
CAclubindia
