The NCLT Has Admitted My Company Into CIRP: What Happens to Me as a Director

From the moment the National Company Law Tribunal admitted the petition, the powers of your board stood suspended and the management of the company vested in the interim resolution professional under section 17 of the Insolvency and Bankruptcy Code, 2016. As a director after CIRP admission you owe a duty of full assistance and cooperation under section 19, and section 70 backs that duty with imprisonment of three to five years for an officer who withholds property, books or information. The moratorium under section 14 protects the company, not you: your personal guarantee, the cheques you signed, and every transaction inside the look-back windows of sections 43 to 66 remain open.

Part of the corporate and commercial law practice at S Jain & Attorneys, Bangalore.

This guide is for the founder-director whose company was admitted yesterday on a bank's section 7 petition, and who has an email from the IRP asking for the books, the bank mandates, the passwords, the asset register and the employee list, with a meeting tomorrow. The creditor's side, and your own insolvency as a personal guarantor, have their own guides linked below.

What the IRP is entitled to take custody of under section 18 and regulation 3A of the CIRP Regulations, before tomorrow's meeting:

• Books of account, statutory registers, audited statements, the fixed asset register, and the records of operations and payments for the two years before admission.
• Every bank account, which under section 17(1)(d) already answers to the IRP, and admin access to the accounting, payroll, email and ERP systems under section 17(1)(c).
• Keys, stock, premises and the payroll, so the company runs as a going concern under section 20.
• A signed list of what you handed over, witnessed by two people, which regulation 3A(4) requires.

What changed for me as a director after CIRP admission?

Four things, at once. The date of admission is the insolvency commencement date under section 5(12), the tribunal appoints the interim resolution professional on that date under section 16(1), and section 17(1) provides that management vests in him, that the board's powers stand suspended and are exercised by him, that officers and managers report to him and give him access to records, and that the company's bankers act on his instructions. You were not removed. Your office continues, with its powers suspended.

Section 18 sets his first job: collect two years of information on assets, finances and operations, collate claims, constitute the committee of creditors, and take custody of every asset recorded as the company's. Section 20 has him run the company as a going concern and lets him instruct the personnel, which now includes you.

One consequence is easy to miss. In Innoventive Industries v ICICI Bank, decided on 31 August 2017, the Supreme Court held that once an insolvency professional is appointed, the erstwhile directors cannot maintain an appeal on behalf of the company. A challenge to the admission order goes to the NCLAT under section 61 in your own name as a person aggrieved, within thirty days, with fifteen more only for sufficient cause.

What must I hand over to the IRP, and by when?

Everything he requires, as soon as he requires it. Section 19(1), as substituted by the Insolvency and Bankruptcy Code (Amendment) Act, 2026 from 26 May 2026, binds any person who is or has been a personnel of the corporate debtor or its promoter or associated with its management, or engaged in a contract for service with it, to extend all assistance and cooperation as may be required by him. Resigning does not take you out of it. The Code fixes no number of days. The IRP's requisition sets the date, and the tribunal enforces a short one: in the matter that reached the NCLAT as Rajesh Toshniwal v Kamal Nayan Jain, the Kolkata bench gave the suspended directors three days, failing which the resolution professional could seek police assistance.

Regulation 3A sets the mechanics. The IRP takes custody of the section 18(a) records and of the assets recorded in the balance sheet or any other record. You provide a list of assets and records while handing over, or he prepares it himself. Each list is signed by the parties present and by at least two witnesses. What is not handed over, he requisitions in writing. Regulation 3A(7) then shows how a case against you is built: a section 19(2) application for a missing item must show that it appeared in the requisition notice and was absent from the signed list. That rule cuts both ways, which is why you insist on the list. Withholding the ledgers gains nothing, since section 17(2)(d) gives him the auditors' and accountants' copies anyway.

Deadline warning. The public announcement under regulation 6 goes out within three days of the IRP's appointment and fixes the last date for claims at fourteen days from that appointment. If the company owes you money, that date is yours as much as any vendor's.

Four facts to hold on to before the meeting:

What happens if I do not cooperate with the IRP?

Two things, one civil and one criminal. Under section 19(2) the IRP applies to the tribunal, and under section 19(3) the tribunal shall direct you to comply with his instructions and cooperate. The Toshniwal matter shows what follows when that order is ignored: a transaction audit traced related-party transfers through the bank statements, and the NCLAT on 21 January 2026 upheld orders requiring the directors to deposit those amounts, because once the transfers were shown the onus was on the directors to explain them.

The criminal side is section 70. An officer who, on or after the commencement date, does not disclose the company's property and transactions to the resolution professional, does not deliver the property, books and papers in his custody, or prevents their production, faces imprisonment of three to five years, or a fine of one lakh to one crore rupees, or both, unless he proves he had no intent. Section 71 carries the same term for destroying or falsifying books with intent to defraud. Breaching the moratorium is no longer a jail offence: the 2026 Amendment Act omitted section 74 and inserted section 67B, under which the tribunal may impose a penalty of one lakh to two crore rupees on the officer who permitted the breach.

Who prosecutes matters. Section 236 sends these offences to the Special Court, and no court takes cognizance except on a complaint by the Insolvency and Bankruptcy Board of India or the Central Government.

Common mistake. Treating the IRP's first email as an opening position to negotiate. It is a requisition under section 19 read with regulation 3A, and every reply becomes an exhibit in the section 19(2) application or, later, the section 66 application. Answer in writing, the same day, with dates.

Can I still attend CoC meetings and see the resolution plan?

Yes to both, and the first without asking. Section 24(3)(b) requires the resolution professional to give notice of every committee meeting to the members of the suspended board, and section 24(4) lets you attend without a vote. The first meeting is held within seven days of the committee's constitution under section 22(1).

Directors are most often stonewalled on the plan, which the Supreme Court settled in Vijay Kumar Jain v Standard Chartered Bank on 31 January 2019. Members of the erstwhile board, who are often guarantors, are vitally interested in a resolution plan because section 31(1) binds guarantors to it, and a plan may cut the company's debt while leaving the guarantor exposed for all of it. The directors were ordered to be given copies of all resolution plans, subject to a confidentiality undertaking. Sign it and take the plans.

One qualification. The proviso to section 21(2) denies a related-party financial creditor any representation, participation or vote in the committee, so if you lent the company money you have no rights as a creditor there. Vijay Kumar Jain makes clear that proviso does not touch your attendance as a suspended director.

Can I bid for my own company?

Only if section 29A does not catch you, and for most promoters of a company admitted on a bank's petition it does. Every applicant swears to eligibility under section 30(1). Three clauses do the damage:

• Clause (c): at the time of submitting the plan he has an account, or an account of a corporate debtor he manages or promotes, classified as a non-performing asset for at least a year before the CIRP began, unless he clears all overdue amounts with interest and charges first.
• Clause (h): he gave a guarantee to a creditor for a corporate debtor admitted on that creditor's application, and the guarantee has been invoked and remains unpaid.
• Clause (g): he was a promoter or in the management of a corporate debtor in which an avoidable transaction has been the subject of an order under the Code. Arcelormittal India v Satish Kumar Gupta, Supreme Court, 4 October 2018, says this one cannot be cured by paying.

Clause (j) extends every ineligibility to a connected person, meaning under Explanation I anyone in the management or control of the applicant, anyone who will manage the company under the plan, and their related entities. Arcelormittal called section 29A(c) a see-through provision: persons in charge must not come back in some other form to regain control without first paying off the debts. Your brother-in-law's company is caught for the same reason you are.

Two doors remain. Section 240A(1) disapplies clauses (c) and (h) in the CIRP of a micro, small or medium enterprise, so an MSME promoter not caught by clause (g) can bid. And section 12A, as substituted by the 2026 Amendment Act, lets the tribunal allow withdrawal of the admitted petition on an application by the resolution professional with the approval of ninety per cent of the committee's voting share, decided within thirty days. Section 12A(2) bars withdrawal before the committee is constituted and after the first invitation for resolution plans, and regulation 30A, substituted from 2 June 2026, has the resolution professional file within three days of the committee's approval, with a bank guarantee or demand draft for the process costs, and not after the invitation for expressions of interest under regulation 36A. A funded settlement offer to the bank in the first weeks is the founder's real lever, and it expires with the expression of interest.

Which past transactions will be dug up, and how far back?

Two years for anything involving you or a related party, one year for everyone else, and since the 2026 Amendment Act each window starts that long before the initiation date, the day the bank filed its petition, and runs up to the date of admission. Regulation 35A requires the resolution professional to look: an opinion by the seventy-fifth day from commencement on whether the company was subjected to any transaction under sections 43, 45, 50 or 66, a determination by the hundred and fifteenth, and an application to the tribunal by the hundred and thirtieth. Section 25(2)(j) makes filing the application his duty.

The windows, in the amended words:

• Preferential transactions, section 43: a transfer of the company's property to a creditor, surety or guarantor for an antecedent debt, leaving that person better off than a section 53 distribution would. Under section 43(4) the period starts two years before the initiation date for a related party, one year for anyone else, and ends on the insolvency commencement date. Ordinary-course transfers are excluded by section 43(3)(a).
• Undervalued transactions, sections 45 and 46: a gift, or a transfer for significantly less than the company gave, outside the ordinary course, in the same periods.
• Transactions defrauding creditors, section 49: an undervalued transaction made deliberately to keep assets beyond the reach of claimants.
• Extortionate credit transactions, section 50: credit on exorbitant terms, from two years before the initiation date.

You are a related party by definition. Section 5(24)(a) names a director and a relative of a director, and clause (d) adds any private company in which a director of the corporate debtor is a director and holds, with relatives, more than two per cent. Your own loan repaid eighteen months ago, the payment to your sister concern, the company car transferred to your spouse, and the friendly supplier settled while the bank went unpaid are all inside the windows.

The method is fixed. In Anuj Jain, Interim Resolution Professional for Jaypee Infratech v Axis Bank, decided on 26 February 2020, the Supreme Court laid down the sequence on the earlier wording: sift two years of transactions backwards, split the counterparties into related parties and others, trim the second set to one year, and test each transfer against section 43(2) and (3). And the application outlives the process. In Tata Steel BSL v Venus Recruiter, decided on 13 January 2023, a Division Bench of the Delhi High Court held that an avoidance application survives approval of the resolution plan, with recoveries going to the creditors.

Key takeaway. The look-back is not an option the IRP may skip. Regulation 35A gives him a day-75, day-115 and day-130 timetable, the bank's forensic audit reaches him under regulation 35A(4), and section 5(24) makes every transaction with you a related-party transaction inside the two-year window. Assume every such entry will be asked about and prepare the explanation now.

Can I be made to pay personally?

Yes, by an order of the tribunal, through four routes. Section 66(1) covers fraudulent trading: any person knowingly party to a business carried on with intent to defraud creditors can be ordered to contribute to the company's assets. Section 66(2) covers wrongful trading and needs no fraud: a director can be ordered to contribute if, before the commencement date, he knew or ought to have known that there was no reasonable prospect of avoiding CIRP, and did not exercise due diligence in minimising the potential loss to creditors, measured against a person carrying out the same functions.

The third route is the avoidance orders themselves: section 44 vests property back in the company, and sections 48(c) and 51(d) let the tribunal require any person to repay benefits received under an undervalued or extortionate transaction, while section 67 makes the liability a charge on any debt the company owes you and lets that debt be pushed to the bottom of the section 53 waterfall. The fourth route sits outside the Code: section 166(5) of the Companies Act, 2013 makes a director who achieved an undue gain for himself or his relatives liable to repay it to the company.

Where these cases actually turn, in my reading of them, is on the board's own paper for the last year before admission. Section 66(2) is a diligence test, and diligence is proved by minutes, not memory. A board that recorded the cash position monthly, took written advice when the account slipped, stopped taking credit it could not service, and documented why it kept trading has an answer. A board with no minutes from the day the first instalment bounced has nothing. I tell directors to pull those minutes before the IRP asks.

What happens to my personal guarantee and the cheques I signed?

Both stay live, and the moratorium answers neither. Section 14(3)(b) says the moratorium does not apply to a surety in a contract of guarantee to a corporate debtor, and in State Bank of India v V. Ramakrishnan the Supreme Court explained why: personal guarantees are mostly given by directors in management, and the Code does not let them escape an independent and co-extensive liability for the entire debt. The bank can invoke your guarantee tomorrow and take you into your own process under Part III. What a repayment plan looks like there is in reading a personal guarantor's repayment plan, and whether to sign one at all is in should founders sign a personal guarantee. An invoked and unpaid guarantee also bars you from bidding under section 29A(h), and section 31(1) binds guarantors to the approved plan, which is why Vijay Kumar Jain gives you the right to read it.

The cheques are the same story on the criminal side. In P. Mohanraj v Shah Brothers Ispat the Supreme Court held that a section 138 proceeding against the corporate debtor is covered by section 14(1)(a), so the complaint against the company is stayed, but that the natural persons made liable by section 141 continue to be statutorily liable. Who is in that net, and the averment and resignation defences, are in cheque bounce cases against directors under section 141.

Am I now disqualified as a director of my other companies?

No. Section 164 of the Companies Act, 2013 lists the disqualifications, and admission of a company you direct into CIRP is not among them. Section 164(1)(b) disqualifies an undischarged insolvent, which is about you as an individual, not your company. Section 164(2) bars for five years a person who is or has been a director of a company that has not filed financial statements or annual returns for three continuous financial years, or has defaulted for a year on deposits, debentures or a declared dividend. Neither limb is triggered by a section 7 admission, and nothing in the order touches your DIN or your other boards.

The watch point is the second limb, years out. Section 17(2)(e) makes the IRP responsible for the company's statutory compliance, and if a long CIRP or liquidation lets three years of filings lapse, section 164(2)(a) speaks of a person who is or has been a director of that company and section 167(1)(a) vacates his office everywhere. The causes and the cure are in our guide on director disqualification under section 164, and a resignation that never reached the Registrar is dealt with in director resigned but still shown on the MCA portal. Section 29A(e) adds that a disqualified director cannot be a resolution applicant.

Will I be paid, and what about the money the company owes me?

Board remuneration ends with the board's powers, and anything after that is the IRP's call. Section 20(2)(d) lets him instruct personnel and section 20(2)(b) lets him enter into or modify contracts, so if he wants you running the plant, that is an engagement he makes, paid as a process cost under regulation 31. Nothing in the Code entitles a suspended director to keep drawing his salary as of right.

Money the company already owes you is a claim, and its character decides the form. A loan you gave is financial debt, filed in Form C under regulation 8 by the fourteen-day date in the public announcement. Unpaid pre-admission remuneration is a different debt, filed as an employee's claim only if you were on the payroll as a whole-time director. Why the distinction matters for priority is in operational debt versus financial debt under the IBC.

Filing gives you no vote. Section 5(24)(a) makes a director a related party, and the proviso to section 21(2) strips a related-party financial creditor of representation, participation and voting. You receive what the approved plan provides for your class. How a founder's loan and shares come back outside insolvency is in how a co-founder's shares, directorship and loan come back.

What can the IRP not do to me?

• He cannot arrest or prosecute you. Section 236(2) allows cognizance only on a complaint by the Board or the Central Government. He can report you. He cannot charge you.
• He cannot take your personal assets. Section 18(f) limits his custody to assets the corporate debtor owns as recorded in its balance sheet or a registry. Your own flat, car and savings are outside his reach without a tribunal order under section 44, 48, 51 or 66.
• He cannot stop you running other businesses or sitting on other boards. Sections 14 and 17 speak only of the corporate debtor.
• He cannot exclude you from committee meetings or refuse you the plans.
• He cannot make you pay a company debt by letter. Every route to your pocket runs through a tribunal order on an application you are heard on, and section 19(3) directions likewise come from the tribunal. Section 17(1)(c) still obliges you to report and give access from day one.

One provision that sounds like protection is not. Section 32A(1) ends the company's liability for pre-CIRP offences once a plan passes control to someone unconnected with the old management, but its second proviso keeps every officer in default who was involved liable to prosecution, and the Explanation to section 32A(2) preserves action against the property of anyone other than the corporate debtor. The immunity is bought for the company by the buyer, not for you.

What should I do in the first seven days, step by step?

1. Get the admission order and read it for the commencement date, the IRP's name and registration number, and the moratorium declaration.
2. Reply to the IRP today, in writing, confirming the meeting and asking for his requisition in writing under regulation 3A(5).
3. Stop every payment, transfer and card use from the company's accounts now. Section 14(1)(b) bars any transfer of the company's assets, and section 67B exposes the officer who permits it to a penalty of up to two crore rupees.
4. Prepare the regulation 3A(2) list of assets and records, hand over against it, have it signed by everyone present and two witnesses, and keep a copy.
5. Separate in writing what belongs to the company from what belongs to you or third parties under the Explanation to section 18.
6. Diarise the last date for claims, fourteen days from the IRP's appointment under regulation 6(2)(c), and file any loan you gave the company.
7. Pull the company's transactions with you, your relatives and your entities from two years before the petition was filed, and with everyone else from one year before it, and write a one-line commercial explanation for each before the day-75 opinion under regulation 35A.
8. Decide within the thirty-day window under section 61 whether to appeal in your own name, and separately whether to put a funded settlement offer to the bank for a section 12A withdrawal.
9. Test section 29A against your facts: any NPA classification and its age, whether your guarantee has been invoked, and whether the company is an MSME under section 240A.
10. Retain counsel for yourself, separately from the company's. After Innoventive you cannot act for the company.

What happens when: the CIRP timeline seen from the suspended board

The Code and the model timeline in the CIRP Regulations fix these dates, counted from the commencement date, T.

Which mistakes do directors make in the first month?

• Moving money after the order. A transfer to a sister company breaches section 14(1)(b) and draws a section 67B penalty of up to two crore rupees on the officer who authorised it.
• Wiping laptops and mailboxes. Section 71 makes destroying or altering books with intent to defraud a three-to-five-year offence.
• Answering the section 19 requisition in instalments. The Toshniwal matter ran from a three-day handover order to deposit orders upheld six years later.
• Writing to the IRP as an adversary. He is the company now, and hostile emails become exhibits.
• Settling one friendly creditor in full, or repaying your own loan, in the months before the petition. Both are the textbook section 43 preference.
• Assuming the moratorium covers the guarantee and the cheques. It covers neither.

Four numbers to keep in front of you for the rest of the process:

Frequently Asked Questions

This article is for general informational purposes only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.

Related Guides

Our corporate and commercial law practice advises directors and promoters through the CIRP of their companies, and our money recovery practice handles the guarantee and cheque proceedings that run alongside it.

• Rs 6.25 Crore or Rs 1,500 Crore? Reading a Personal Guarantor Repayment Plan
• Cheque Bounce Cases Against Directors: Section 141, the Averment Rules and the Resignation Defence
• Director Disqualification Under Section 164: Causes and Cure