Section 101 Moratorium under the Insolvency and Bankruptcy Code, 2016
Section 101 of the Insolvency and Bankruptcy Code, 2016 provides for a moratorium after an insolvency resolution application under Part III is admitted under Section 100. It specifies when the moratorium begins, its duration, the restrictions operating during that period, its effect in relation to a firm, and the power to exclude notified transactions.
Text of Section 101 - Moratorium
(1) When the application is admitted under section 100, a moratorium shall commence in relation to all the debts and shall cease to have effect at the end of the period of one hundred and eighty days beginning with the date of admission of the application or on the date the Adjudicating Authority passes an order on the repayment plan under section 114, whichever is earlier.
(2) During the moratorium period-
(a) any pending legal action or proceeding in respect of any debt shall be deemed to have been stayed;
(b) the creditors shall not initiate any legal action or legal proceedings in respect of any debt; and
(c) the debtor shall not transfer, alienate, encumber or dispose of any of his assets or his legal rights or beneficial interest therein;
(3) Where an order admitting the application under section 96 has been made in relation to a firm, the moratorium under sub-section (1) shall operate against all the partners of the firm.
(4) The provisions of this section shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.
Meaning and effect of Section 101
When does the moratorium begin?
The moratorium under Section 101 begins when the Adjudicating Authority admits the insolvency resolution application under Section 100. Section 100 deals with admission or rejection of the application after consideration of the report submitted by the resolution professional under Section 99.
How long does the moratorium continue?
Under Section 101(1), the moratorium continues until the earlier of two events: expiry of 180 days from the date of admission, or the date on which the Adjudicating Authority passes an order on the repayment plan under Section 114.
Stay of pending debt proceedings
Section 101(2)(a) provides that pending legal action or proceedings in respect of any debt are deemed to be stayed during the moratorium period. The statutory wording links the stay to legal action or proceedings in respect of a debt.
Restriction on creditors commencing proceedings
Section 101(2)(b) prevents creditors from initiating legal action or legal proceedings in respect of any debt while the moratorium remains in force.
Restriction on dealing with assets
Section 101(2)(c) restricts the debtor from transferring, alienating, encumbering or disposing of assets, legal rights or beneficial interests during the moratorium. This preserves the debtor's asset position while the statutory insolvency resolution process proceeds.
Effect where the debtor is a firm
Section 101(3) provides that where the relevant admission order has been made in relation to a firm, the moratorium under Section 101(1) operates against all partners of the firm, subject to the statutory terms governing the proceeding.
Transactions that may be excluded
Section 101(4) authorises the Central Government, in consultation with a financial sector regulator, to notify transactions to which Section 101 will not apply. Any question about an exclusion should therefore be checked against notifications in force at the relevant time.
Section 96 interim moratorium and Section 101 moratorium
Section 96 and Section 101 operate at different stages. Section 96 addresses an interim moratorium associated with filing of an application, while Section 101 creates the moratorium after admission under Section 100. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 inserted Section 96(4), excluding the Section 96 interim moratorium where an insolvency resolution application concerns a personal guarantor to a corporate debtor. The amendment took effect from 26 May 2026. It did not substitute or omit Section 101.
Key points at a glance
- Section 101 is part of the insolvency resolution framework for individuals and partnership firms under Part III of the Code.
- The Section 101 moratorium starts upon admission of the application under Section 100.
- Its maximum statutory period is 180 days from admission, unless an order on the repayment plan under Section 114 is passed earlier.
- Pending debt-related legal proceedings are stayed and creditors cannot commence debt-related legal proceedings during the moratorium.
- The debtor is restricted from transferring, alienating, encumbering or disposing of assets, legal rights or beneficial interests during the moratorium.
- Section 101 should not be confused with the interim moratorium under Section 96, particularly after the 2026 amendment concerning personal guarantors to corporate debtors.
Related provisions
Section 101 should be read with Sections 94 and 95 concerning applications by a debtor or creditor, Section 96 concerning interim moratorium, Section 99 concerning the resolution professional's report, Section 100 concerning admission or rejection, Sections 102 to 113 governing the subsequent repayment-plan process, and Section 114 concerning the Adjudicating Authority's order on the repayment plan.
This page is intended as a statutory reference and general legal information. For a proceeding or transaction, the current Act, commencement notifications, applicable rules and regulations, and binding judicial decisions should be checked.