CHAPTER II - CORPORATE INSOLVENCY RESOLUTION PROCESS

Section 7 of the Insolvency and Bankruptcy Code 2016: CIRP by Financial Creditor

Updated: 30 September 2026 | Insolvency and Bankruptcy Code, 2016

Section 7 governs initiation of the corporate insolvency resolution process (CIRP) by a financial creditor. It specifies who may apply, the evidence and proposed interim resolution professional to accompany the application, the NCLT's examination of default, and the statutory grounds for admission or rejection.

2026 amendment: With effect from 26 May 2026, Section 7 was amended to make the admission test more explicit. The Adjudicating Authority must decide the application within the statutory framework by examining default, completeness of the application and whether disciplinary proceedings are pending against the proposed resolution professional. The amended provision also states that where the admission requirements are met, no other ground is to be considered for rejecting the application.

Contents

Who can file under Section 7
Class creditors and real estate allottees
Application and evidence
Admission or rejection by NCLT
Important definitions

Who Can File an Application Under Section 7?

A financial creditor may file an application, either by itself or jointly with other financial creditors, or through another person acting on its behalf where permitted by Central Government notification, to initiate CIRP against a corporate debtor when a default has occurred.

For Section 7(1), the default may relate to a financial debt owed not only to the applicant financial creditor but also to another financial creditor of the corporate debtor.

A "financial creditor" is defined in Section 5(7) as a person to whom a financial debt is owed and includes a person to whom the debt has been legally assigned or transferred. "Financial debt" is defined in Section 5(8).

Special Filing Thresholds for Class Creditors and Real Estate Allottees

Section 7 contains special joint-filing requirements for specified financial creditors in a class and for financial creditors who are allottees under a real estate project. The application must be filed jointly by at least 100 such creditors or 10 percent of the total number of such creditors in the relevant class or project, whichever is less, subject to the exact statutory conditions.

This numerical filing requirement is separate from the general monetary threshold under Section 4, under which the general minimum amount of default for Part II is Rs 1 crore.

Section 7 Application, Evidence and Proposed Resolution Professional

1. Application: The financial creditor must apply in the prescribed form and manner and pay the prescribed fee. The application procedure is governed by the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

2. Evidence of default: The application must furnish the record of default recorded with an information utility or such other record or evidence of default as may be specified.

3. Proposed interim resolution professional: The applicant must provide the name of the resolution professional proposed to act as interim resolution professional.

4. Other information: The applicant must furnish any other information specified by the Insolvency and Bankruptcy Board of India.

The current rules, regulations and forms may be checked through the IBBI Legal Framework.

NCLT Admission or Rejection Under Section 7

The National Company Law Tribunal is the Adjudicating Authority for corporate persons. Under the amended Section 7(5), it must, within fourteen days of receipt of the Section 7(2) application, pass an order admitting or rejecting it on the statutory grounds.

Admission	Rejection
Default has occurred; the application is complete; and no disciplinary proceeding is pending against the proposed resolution professional.	Default has not occurred; or the application is incomplete; or a disciplinary proceeding is pending against the proposed resolution professional.

Before rejection because of a curable defect, the applicant must be given notice to rectify the defect within seven days from receipt of the notice. If the Adjudicating Authority does not pass an order within fourteen days, the amended provision requires reasons for the delay to be recorded in writing.

The 2026 amendment further clarifies that when the requirements for admission have been complied with, no other ground is to be considered to reject an application filed under Section 7.

CIRP commences from the date of admission. The admission order is communicated to the financial creditor and corporate debtor, while a rejection order is communicated to the financial creditor, within the statutory period.

Important Definitions for Section 7

Provision	Term	Meaning
Section 3(8)	Corporate debtor	A corporate person who owes a debt to any person.
Section 3(12)	Default	Non-payment of debt when the whole or any part or instalment has become due and payable and is not paid.
Section 5(7)	Financial creditor	A person to whom a financial debt is owed, including a person to whom such debt has been legally assigned or transferred.
Section 5(8)	Financial debt	A debt along with interest, if any, disbursed against consideration for the time value of money and including the transactions specified in Section 5(8).
Section 5(12)	Insolvency commencement date	The date of admission of the application for initiating CIRP by the Adjudicating Authority under Section 7, 9 or 10, as applicable.

Official Legal Resources

For the consolidated statute and current subordinate law, refer to the India Code portal, IBBI Acts, IBBI Notifications and IBBI Regulations.

Legal information: Section 7 applications are affected by the date and amount of default, limitation, creditor status, special filing thresholds, evidence, procedural rules, regulations and binding judicial decisions. The current law should be verified for the facts of each matter.