Chapter IV - Bankruptcy Order for Individuals and Partnership Firms

Section 121: Application for Bankruptcy

Section 121 of the Insolvency and Bankruptcy Code, 2016 specifies when a creditor or debtor may apply to the Adjudicating Authority for bankruptcy. Following the Insolvency and Bankruptcy Code (Amendment) Act, 2026, the provision also covers an order terminating the insolvency resolution process under Section 106(1A).

Current text of Section 121

Who may apply for bankruptcy?

Section 121(1) permits a bankruptcy application to be made by a creditor, either individually or jointly with other creditors, or by the debtor. Where the debtor is a firm, Section 121(3) expressly permits any partner of the firm to file the application.

Circumstances permitting a bankruptcy application

A bankruptcy application under Section 121 is linked to specified orders made during the preceding insolvency resolution process. The current provision recognises four statutory circumstances:

• Section 100(4): an order of the Adjudicating Authority in the circumstances specified by Section 100.
• Section 115(2): an order connected with rejection of the repayment plan under the statutory framework governing the effect of the Adjudicating Authority's order.
• Section 118(3): an order recording that a repayment plan has not been completely implemented.
• Section 106(1A): following the 2026 amendment, an order terminating the insolvency resolution process in the circumstances covered by that provision.

Section 106(1A) and the 2026 change

The 2026 amendment expanded the route to bankruptcy by adding Section 121(1)(d). Section 106(1A) addresses termination of the insolvency resolution process where a repayment plan is not prepared in accordance with the statutory requirements. Once the Adjudicating Authority passes the relevant order under Section 106(1A), Section 121 permits the creditor or debtor to proceed with a bankruptcy application, subject to the Code.

Three-month time limit

Section 121(2) provides a specific filing period. The bankruptcy application must be filed within three months from the date of the relevant order referred to in Section 121(1). The date and nature of the underlying order are therefore important for determining the statutory filing period.

Application where the debtor is a partnership firm

Under Section 121(3), where the debtor is a firm, any of its partners may file the bankruptcy application contemplated by Section 121(1). The provision should be read with the definitions and other provisions of Part III applicable to individuals and partnership firms and, where relevant, the notified scope of those provisions.

Adjudicating Authority and notified scope

Part III of the Code contains the insolvency resolution and bankruptcy framework for individuals and partnership firms. Sections 94 to 187 were brought into force from 1 December 2019 insofar as they relate to personal guarantors to corporate debtors. In such notified cases, the jurisdictional provisions of the Code determine the competent Adjudicating Authority.

What happens after Section 121?

Section 121 establishes the circumstances and time limit for making the bankruptcy application. The following provisions prescribe the application and subsequent procedure. Section 122 deals with an application by the debtor, while Section 123 deals with an application by a creditor. Section 124 addresses the effect of the application, and the later provisions deal with appointment of the bankruptcy trustee and the bankruptcy order.

This page is an informational statutory reference. For a live proceeding, verify the current Code, commencement notifications, applicable rules and IBBI regulations, and relevant judicial orders.