Section 86: Objections by Creditor and Their Examination by Resolution Professional

Section 86 of the Insolvency and Bankruptcy Code, 2016 forms part of the fresh start process under Part III. It provides a limited statutory mechanism through which a creditor named in an order under Section 84 may object to the inclusion of a qualifying debt or to the correctness of its details.

Key time limits: An eligible creditor may object within 10 days from receipt of the order under Section 84. The resolution professional must examine the objection and accept or reject it within 10 days from the date of the objection application.

Section 86 - Statutory Provisions

(1) Any creditor mentioned in the order of the Adjudicating Authority under Section 84 to whom a qualifying debt is owed may, within a period of ten days from the date of receipt of the order under Section 84, object only on the following grounds, namely:-

(a) inclusion of a debt as a qualifying debt; or

(b) incorrectness of the details of the qualifying debt specified in the order under Section 84.

(2) A creditor may file an objection under sub-section (1) by way of an application to the resolution professional.

(3) The application under sub-section (2) shall be supported by such information and documents as may be prescribed.

(4) The resolution professional shall consider every objection made under this section.

(5) The resolution professional shall examine the objections under sub-section (2) and either accept or reject the objections, within ten days of the date of the application.

(6) The resolution professional may examine any matter that appears to him to be relevant to the making of a final list of qualifying debts for the purposes of Section 92.

(7) On the basis of the examination under sub-section (5) or sub-section (6), the resolution professional shall-

(a) prepare an amended list of qualifying debts for the purpose of the discharge order;

(b) make an application to the Adjudicating Authority for directions under Section 90; or

(c) take such other steps as he considers necessary in relation to the debtor.

Who Can File an Objection under Section 86?

The right to object is given to a creditor mentioned in the Adjudicating Authority's order under Section 84 where a qualifying debt is owed to that creditor. The objection is therefore linked to the fresh start application already considered by the Adjudicating Authority.

Permitted Grounds of Objection

Section 86(1) restricts an objection to two grounds: the inclusion of a debt as a qualifying debt, or the incorrectness of the details of a qualifying debt stated in the Section 84 order. The provision does not create an unrestricted right to reopen every aspect of the fresh start application.

How Is the Objection Made?

The creditor makes the objection by an application to the resolution professional. Under Section 86(3), the application must be supported by the information and documents prescribed under the applicable legal framework.

Role of the Resolution Professional

The resolution professional must consider every objection made under Section 86 and decide whether to accept or reject it within the statutory period. The resolution professional may also examine any matter considered relevant to preparing the final list of qualifying debts for the purposes of Section 92.

Consequences of the Examination

After examining the objection or another relevant matter, the resolution professional may prepare an amended list of qualifying debts for the discharge order, seek directions from the Adjudicating Authority under Section 90, or take other steps considered necessary in relation to the debtor.

Meaning of Important Terms

Creditor: For the purposes of the Code, a creditor is a person to whom a debt is owed and includes the categories specified in the statutory definition in Section 3.

Qualifying debt: For the fresh start process under Part III, Section 79 defines a qualifying debt and identifies debts excluded from that expression.

Resolution professional: Section 79 defines the resolution professional for Part III as an insolvency professional appointed under that Part for conducting the fresh start process or insolvency resolution process.

Adjudicating Authority: The expression refers to the adjudicating forum designated under the applicable provisions of the Insolvency and Bankruptcy Code for proceedings under Part III.

Related Sections

This page is intended as a statutory information resource. The applicable law should be checked against the official text, amendments, notifications and rules in force on the relevant date.