Drafting OF Insolvency Application (IBC 2016)

What This Service Is

When a builder or company owes you money, you can start a process called a Corporate Insolvency Resolution Process (CIRP). This happens at the National Company Law Tribunal (NCLT) – a special court that deals with company problems. You can make an application, called an IBC Section 7 Petition (if you are a financial creditor, meaning they owe you money directly) or a Section 9 Petition (if you are an operational creditor, meaning they owe you for goods or services).

This application is a powerful way to get a builder or developer to resolve payment issues. Following changes in 2020 and Supreme Court rulings, at least 100 property buyers (or 10% of all buyers in a project, whichever is fewer) can jointly file as financial creditors. This minimum number, combined with the complex legal drafting, makes these applications very demanding but also very effective for homebuyers.

What the Service Entails

An IBC Section 7 Petition is the strongest tool available for homebuyers, and it requires careful drafting. We start by checking if you meet the minimum number of petitioners (100 home buyers or 10% of total buyers). We help you gather and organize proof of payments from all joint petitioners. Then, we create a detailed data chart that confirms each petitioner's status as a 'financial creditor' – someone to whom the builder directly owes money. Because our team helped write the Insolvency and Bankruptcy Code (IBC) CIRP Rules – the guidelines for this process – we know exactly how the NCLT evaluates these applications. We prepare every petition to meet their high standards.

Next, we structure your petition. This involves clearly showing the financial debt, the builder's failure to pay (the default), and each homebuyer's individual claim. We also suggest how you want the problem solved. We review the initial petition to ensure everything is consistent before sharing it with your representatives. After discussing potential questions from the NCLT and likely objections from the builder, we deliver a final, ready-to-file petition with all necessary attachments.

Our Specialized Inputs

The IndiaPropLaw team was deeply involved in creating the IBC 2016 CIRP Rules – the official guidelines for company insolvency – and the Mediation Act 2023. This means we bring expert, insider knowledge to every IBC petition. We understand how the NCLT judges check if you meet the minimum number of petitioners, the quality of your proof of debt and default, and whether your proposed solution is credible. We structure your petitions to meet these expectations.

We also advise you on how much power an IBC petition gives you for a 'One-Time Settlement' (OTS) negotiation – where you try to settle the debt outside of court. Often, this approach can lead to a faster resolution than going through the full CIRP process.