7. Initiation of corporate insolvency resolution process by financial creditor.—
(1) A financial
creditor either by itself or jointly with 5[other financial creditors, or any other person on behalf of the
financial creditor, as may be notified by the Central Government,] may file an application for initiating
corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority
when a default has occurred.
6
[
Provided that for the financial creditors, referred to in clauses
(a) and
(b) of sub-section (6A) of
section 21, an application for initiating corporate insolvency resolution process against the corporate
debtor shall be filed jointly by not less than one hundred of such creditors in the same class or not less
than ten per cent. of the total number of such creditors in the same class, whichever is less:
Provided further that for financial creditors who are allottees under a real estate project, an
application for initiating corporate insolvency resolution process against the corporate debtor shall be
filed jointly by not less than one hundred of such allottees under the same real estate project or not less
1. Subs. by Act 8 of 2018, s.3 (w.e.f. 23-11-2017).
2. Ins. by Act 26 of 2021, s. 3 (w.e.f. 4-4-2021).
3. Subs. by s. 3, ibid., for “any person” (w.e.f.23-11-2017).
4. Ins. by Act 26 of 2019, s. 2 (w.e.f. 16-08-2019).
5. Subs. by Act 26 of 2018, s. 4, for “other financial creditors” (w.e.f. 6-6-2018).
6. Ins. by Act 1 of 2020, s. 3 (w.e.f. 28-12-2019).
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than ten per cent. of the total number of such allottees under the same real estate project, whichever is
less:
Provided also that where an application for initiating the corporate insolvency resolution process
against a corporate debtor has been filed by a financial creditor referred to in the first and second provisos
and has not been admitted by the Adjudicating Authority before the commencement of the Insolvency and
Bankruptcy Code (Amendment) Act, 2020, such application shall be modified to comply with the
requirements of the first or second proviso within thirty days of the commencement of the said Act,
failing which the application shall be deemed to be withdrawn before its admission.]
Explanation.—For the purposes of this sub-section, a default includes a default in respect of a
financial debt owed not only to the applicant financial creditor but to any other financial creditor of the
corporate debtor.
(2) The financial creditor shall make an application under sub-section
(1) in such form and manner
and accompanied with such fee as may be prescribed.
(3) The financial creditor shall, along with the application furnish—
(a) record of the default recorded with the information utility or such other record or evidence of
default as may be specified;
(b) the name of the resolution professional proposed to act as an interim resolution professional;
and
(c) any other information as may be specified by the Board.
(4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under
sub-section
(2), ascertain the existence of a default from the records of an information utility or on the
basis of other evidence furnished by the financial creditor under sub-section
(3).
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Provided that if the Adjudicating Authority has not ascertained the existence of default and passed
an order under sub-section
(5) within such time, it shall record its reasons in writing for the same.]
(5) Where the Adjudicating Authority is satisfied that—
(a) a default has occurred and the application under sub-section
(2) is complete, and there is no
disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit
such application; or
(b) default has not occurred or the application under sub-section
(2) is incomplete or any
disciplinary proceeding is pending against the proposed resolution professional, it may, by order,
reject such application:
Provided that the Adjudicating Authority shall, before rejecting the application under clause
(b) of
sub-section
(5), give a notice to the applicant to rectify the defect in his application within seven days of
receipt of such notice from the Adjudicating Authority.
(6) The corporate insolvency resolution process shall commence from the date of admission of the
application under sub-section
(5).
(7) The Adjudicating Authority shall communicate—
(a) the order under clause
(a) of sub-section
(5) to the financial creditor and the corporate debtor;
(b) the order under clause
(b) of sub-section
(5) to the financial creditor,
within seven days of admission or rejection of such application, as the case may be.
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