Yes, but the door most articles describe moved on 26 May 2026. Section 12A of the Insolvency and Bankruptcy Code, 2016, as substituted by the Insolvency and Bankruptcy Code (Amendment) Act, 2026, lets the National Company Law Tribunal allow withdrawal of an admitted application on an application made by the resolution professional with the approval of ninety percent of the voting share of the committee of creditors, and it now bars any withdrawal before that committee is constituted or after the first invitation for resolution plans goes out. To withdraw CIRP after admission under section 12A you therefore settle with the vendor now, wait for the committee to be formed, win its vote, and have the resolution professional file Form FA with a bank guarantee or demand draft for the process costs, before the sixtieth-day invitation for expressions of interest.
Part of the money recovery practice at S Jain & Attorneys, Bangalore.
This post is for the promoters of a company admitted into a corporate insolvency resolution process a couple of weeks ago on an operational creditor's section 9 petition, who have found the money and a willing creditor and want the company back. It does not cover an appeal against the admission order, which has its own thirty-day clock under section 61(2). The one crore rupee floor itself is covered in the post on the insolvency threshold.
| Window | Can the withdrawal be filed | Who decides | Form and money | Authority |
|---|---|---|---|---|
| 1. Admission until the committee of creditors is constituted | No. Sign the settlement and line up the vote | Nobody yet. The interim resolution professional is collating claims | None yet | Section 12A(2)(a), regulation 30A(1) proviso (a), section 21(1) |
| 2. Constitution of the committee until the invitation for expressions of interest | Yes. The only window | The committee by ninety percent of voting share, then the Tribunal | Form FA by the resolution professional within three days of the vote, with a bank guarantee or demand draft for the estimated costs | Section 12A(1) and (3), regulation 30A, circular IBBI/CIRP/94/2026 of 2 June 2026 |
| 3. After the invitation for expressions of interest | No | Nobody. The bar is in the Code and overrides other law | Not applicable | Section 12A(2)(b), regulation 30A(1) proviso (b) |
Can we withdraw CIRP after admission under section 12A by settling with the creditor who filed?
Yes, under the section rewritten this year. Section 8 of the Insolvency and Bankruptcy Code (Amendment) Act, 2026, Act 6 of 2026, assented to on 6 April 2026, substituted section 12A, and the Ministry of Corporate Affairs brought it into force from 26 May 2026. Three things changed. The application is now made by the resolution professional, where the old text spoke of the applicant. Sub-section (2) opens with the words "notwithstanding anything contained in any law for the time being in force" and says an admitted application shall not be withdrawn before the committee of creditors is constituted under section 21(1) or after the resolution professional has issued the first invitation for submission of a resolution plan. Sub-section (3) directs the Tribunal to pass its order within thirty days of receiving the application, recording reasons if it cannot. The ninety percent voting share survives untouched.
The change lands on exactly the weeks you are in. In Swiss Ribbons Pvt Ltd v Union of India (Supreme Court, 25 January 2019) the Court said that before a committee is constituted a party could approach the Tribunal directly under Rule 11 of the National Company Law Tribunal Rules, 2016. The Board wrote that route into regulation 30A(1)(a), and in Abhishek Singh v Huhtamaki PPL Ltd (2023) the Supreme Court read that clause as a complete mechanism needing no committee vote while the committee did not exist. The substituted regulation 30A, notified on 1 June 2026 and in force from 2 June 2026, deletes that clause and repeats both bars in a proviso. A regulation might have been read down. The Code's non-obstante clause cannot be, and the Appellate Tribunal has already applied it to a settlement signed about a fortnight after admission. What survives is the ninety percent rule, which Swiss Ribbons upheld as legislative policy, with the rider that under section 60 an arbitrary rejection of a just settlement can be set aside.
Key takeaway. A settlement with the petitioning vendor is the beginning of the exit, not the exit. The only application the Tribunal can now entertain is the resolution professional's, on a ninety percent vote of the committee, between the committee's constitution and the first invitation for plans.
When exactly can the application go in? The three windows in days
Counted from the admission order, the window opens around the twenty-third day on the model timeline in regulation 40A, when the report certifying constitution of the committee is filed under regulation 17(1), and shuts on the day the resolution professional publishes the invitation for expressions of interest, which regulation 36A(1) requires by the sixtieth day. A fortnight in, you are inside window one and the claims are still arriving.
Window two runs from that report to the Form G invitation. The Code's outer line in section 12A(2)(b) is the first invitation for resolution plans, about day 105 under regulation 36B, but regulation 30A(1) proviso (b) shuts the application at the regulation 36A invitation, and the application must travel by that regulation. Plan for day sixty.
Window three is closed twice over. Brilliant Alloys Pvt Ltd v S. Rajagopal (Supreme Court order, 14 December 2018, recorded in Swiss Ribbons) treated the old regulation's cut-off as directory. A regulation's cut-off could be read that way, a bar in the Code cannot. Ebix Singapore Pte Ltd v Committee of Creditors of Educomp Solutions Ltd (Supreme Court, 13 September 2021) held that withdrawals happen only by the section 12A and regulation 30A procedure, that residual powers cannot create a withdrawal route, and that a committee-approved plan cannot be withdrawn once submitted to the Tribunal.
Deadline warning. Regulation 36A(1) requires the invitation for expressions of interest by the sixtieth day, and regulation 30A(1) proviso (b) shuts the withdrawal application on the day it issues. If the vote is not in hand by about day fifty, ask the resolution professional in writing whether the invitation can wait.
The day count, on the regulations' own model timeline:
Day 23: committee exists
Announcement by day three, claims for fourteen days, verification within seven, the report certifying the committee within two more. Only then can a withdrawal be considered.
Day 30: first meeting
Section 22(1) and regulation 17(2) require the first meeting within seven days of the report. If the settlement and the lenders are ready, the vote happens here.
Day 60: Form G
Regulation 36A(1) requires the invitation for expressions of interest by the sixtieth day, and regulation 30A bars a withdrawal application after it issues.
Who has to agree: the vendor, the committee, the resolution professional and the Tribunal
Four consents, and the vendor's is the smallest. The substituted section no longer names the applicant, but in practice the request to the committee begins with the applicant's letter recording the settlement, because no committee will release a debtor whose petitioning creditor is unpaid. Put the settlement, the payment mechanics and the creditor's undertaking to support withdrawal into one signed document.
The committee holds the ninety percent, and it may not include the vendor. Section 21(2) says the committee comprises all financial creditors, and section 24(6) has each vote by the financial debt owed to it. In a section 9 case with bank borrowings the petitioning vendor is not a member: operational creditors holding at least ten percent of the debt get notice under section 24(3)(c) and a representative may attend, but section 24(4) gives them no vote, and your suspended board sits on the same footing. So the vote belongs to the lenders. If the company has no financial debt, regulation 16 builds the committee from the largest unrelated operational creditors, voting by debt, and the vendor's share then decides.
Once the committee has voted, the Tribunal's room to refuse is narrow. In Vallal RCK v Siva Industries and Holdings Ltd (Supreme Court, 3 June 2022) a settlement plan approved by 94.23 percent of the committee had been rejected by the Tribunal and the Appellate Tribunal. The Court set both aside: when ninety percent and more of the creditors, after due deliberation, permit settlement and withdrawal, the adjudicating authority cannot sit in appeal over the committee's commercial wisdom, and interference is warranted only where the decision is wholly capricious, arbitrary, irrational and de hors the statute.
What I tell promoters in this position is that the vote sits with people who will ask one question: what happens to our exposure once the moratorium lifts. A settlement that pays the vendor and says nothing to the banks tends to fail at the committee, not at the Tribunal. Where these applications actually turn is on whether the promoters can show the lenders that the company is worth more in their hands than in a resolution process. That is a financing conversation before it is a drafting one. The committee can reconsider, as it did in Vallal RCK, but every meeting spends days against the sixty-day line.
Common mistake. Paying the vendor in full in the second week and expecting the process to fall away. Nothing can be filed before the committee is constituted, the interim resolution professional's costs keep running, and money paid without an escrow or a written undertaking buys a creditor who no longer needs you.
What will getting out cost?
Four heads, and three of them are knowable to the rupee before you sign. The first is the settlement sum, the petition debt plus whatever the lenders extract as the price of their vote. The company cannot write that cheque itself: section 17(1)(d) makes its banks act on the interim resolution professional's instructions and section 14(1)(b) freezes any transfer of its assets, so the money comes from the promoters or is routed through the professional.
The second is the process cost to the date of filing, which regulation 30A(1) requires to be secured by a bank guarantee or demand draft as the resolution professional estimates it, under heads cross-referenced to regulation 31: any authorised representative's or facilitator's fee, the Board's regulatory fee under regulation 31A, the interim resolution professional's expenses ratified under regulation 33, the resolution professional's expenses fixed under regulation 34, and other costs the committee approves. Read regulation 33 first: the applicant fixed the interim resolution professional's expenses when it filed, or the Tribunal did, and the applicant bears them until the committee ratifies them, so the figure exists and can be asked for in week one.
The third is the deposit that follows the order. Regulation 30A(2) requires whoever furnished the guarantee or draft to deposit the actual expenses to the date of approval, as determined by the resolution professional, into the corporate debtor's bank account within three days, failing which the guarantee is invoked or the draft encashed. The fourth is your own counsel and the settlement paperwork. Section 5(13) makes the professional's fee and the cost of running the company a process cost paid in priority whichever way the process ends.
What happens to the other creditors who have filed claims?
They keep their debts and they get their remedies back. A withdrawal ends the process without a resolution plan, so the section 31 order that binds and extinguishes claims is never passed. Section 14(4) runs the moratorium until the completion of the process, so it ends with the withdrawal order, and the suits, arbitrations, cheque complaints and fresh petitions that section 14(1)(a) froze can be filed or resumed. When the Appellate Tribunal allowed a withdrawal in Anuj Tejpal v Rakesh Yadav (7 July 2021) it set aside the moratorium and the interim resolution professional's appointment, released the company to its board, and recorded that any financial or operational creditor remained free to move a fresh application. The route was the old one, the consequences are unchanged.
The committee will price this in. Swiss Ribbons explained the ninety percent by saying that ordinarily an omnibus settlement involving all creditors ought ideally to be entered into, and in Vallal RCK the settlement plan was amended after members made suggestions before it passed. Expect the lenders to ask what the plan is for every claim that was filed. Creditors who object can put that before the Tribunal, which keeps a discretion under the word "may" in section 12A(1), but after Vallal RCK the ground for overriding a ninety percent vote is arbitrariness, not disappointment. A supplier on the other side will find the claim mechanics in the answer on a company not paying an MSME invoice and the post on MSME delayed payment recovery.
How long does it take?
Between five and ten weeks from the admission order if the committee votes at its first or second meeting, and the filing must in any case precede the sixtieth-day invitation. A vote at the first meeting, three days for the resolution professional to file under regulation 30A(1) and thirty days for the Tribunal under section 12A(3) gives a filing on day thirty-three and an order by about day sixty-three. Listing dates are in nobody's gift and the thirty-day direction carries a reasons clause, so treat the numbers as the design, not a promise.
What each party walks away with:
Vendor settles, lenders vote
In a section 9 case with bank debt the petitioning vendor is not on the committee. Section 21(2) gives the ninety percent vote to the financial creditors by value.
Other debts survive
No plan is approved, so nothing is extinguished. The moratorium ends with the order under section 14(4) and every other creditor may sue or file afresh.
Board comes back
The suspension of the board under section 17 lasts only for the process. On withdrawal the company returns to its directors and the bank mandates follow.
Step by step: the Form FA route after the 2026 amendment
- Sign the settlement with the applicant creditor this week: the amount, who pays and how, an escrow tied to the Tribunal's order, and the creditor's undertaking to support withdrawal.
- Write to the interim resolution professional enclosing it. Ask for the estimated process costs under regulations 31 and 33, and for the proposal to go before the committee at its first meeting.
- Open the conversation with the financial creditors now. They hold the vote under section 21(2). Tell them in writing how their exposure will be handled once the moratorium lifts.
- Attend the first meeting on the notice you receive under section 24(3)(b). You cannot vote, but you can answer questions and amend the proposal.
- Obtain approval by ninety percent of voting share under section 12A(1). Keep the minutes, because Form FA requires the meeting date and the voting share.
- Arrange the bank guarantee or demand draft for the estimated expenses to the date of filing, in the amount the resolution professional determines.
- The resolution professional files Form FA within three days of the approval, and before the regulation 36A invitation issues. Section 12A(3) directs an order within thirty days.
- Within three days of approval, deposit the actual expenses to the date of the order into the company's bank account under regulation 30A(2). Then take the bank mandates back and release the escrow.
The corporate and commercial law practice handles the settlement document, the letter to the committee and the appearance on the withdrawal application. Where interest was counted towards the threshold, the post on interest clubbed with operational debt explains the appeal point, and the post on operational debt and financial debt explains why the vendor and the bank sit in different chairs at the committee.
Frequently Asked Questions
Can a bank's section 7 admission be withdrawn the same way?
Yes. Section 12A covers applications admitted under section 7, 9 or 10, with the same ninety percent vote and the same two bars. The difference is that a petitioning bank is itself a member of the committee under section 21(2), so its own voting share counts towards the ninety.
What if the vendor takes the money and then does not support the withdrawal?
Under the substituted section the application is the resolution professional's, made on the committee's vote, so the vendor's change of heart is not by itself fatal if the committee still approves. Protect yourself anyway: pay into an escrow released on the Tribunal's order, and have the settlement record the vendor's undertaking, which is enforceable as a contract.
Does withdrawal wipe the admission from the record?
No. A withdrawal under section 12A ends the process, it does not set aside the order that admitted the petition. Only an appeal to the Appellate Tribunal under section 61 can do that, and section 61(2) gives thirty days from the order, extendable by fifteen on sufficient cause.
Can the promoters instead submit a resolution plan for their own company?
Only if section 29A does not disqualify them. Clause (c) bars a person whose account, or whose company's account, has been a non-performing asset for a year, unless the overdue amounts with interest are paid before the plan, and clause (h) bars a guarantor whose invoked guarantee remains unpaid. Section 240A(1) lifts clauses (c) and (h) for a micro, small or medium enterprise. A plan means the full process and its costs, so withdrawal is the faster door where the vote can be had.
What happens to the moratorium when the withdrawal is allowed?
It ends. Section 14(4) runs the moratorium until the completion of the process, and the withdrawal order completes it. Proceedings against the company can then resume. Personal guarantors were never inside the moratorium, because section 14(3)(b) excludes a surety.
Should we appeal the admission order instead of settling?
The two routes can run together. An appeal lies to the Appellate Tribunal within thirty days under section 61(2), and the 2026 amendment added a direction in section 61(6) that the appeal be disposed of within three months. An appeal contests the admission, a withdrawal accepts it and buys out of it. If the invoice was genuinely disputed before the demand notice, take advice on both in the same week.
Who signs Form FA?
The resolution professional, not the promoters and not the vendor. Circular IBBI/CIRP/94/2026 of 2 June 2026 specifies the form under regulation 30A: the professional states the date of the committee meeting, the voting share that approved withdrawal, and encloses the record of the bank guarantee or demand draft.
Can the committee vote before the vendor has been paid?
Yes. Nothing in section 12A or regulation 30A requires payment before the vote, and the committee decides the terms it wants. The common arrangement is payment into escrow with release on the Tribunal's order, so that a failed vote does not leave the money with a creditor who still holds an admitted petition.
What if the company has no bank loans at all?
Then regulation 16 applies. The committee is formed from the eighteen largest unrelated operational creditors by value, or all of them if fewer, plus one representative each of workmen and employees, voting in proportion to debt. The petitioning vendor is usually the largest member, and its share of the total debt decides how far its consent carries the ninety percent.
This article is for general informational purposes only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.
