How to File for Insolvency in India (2026): Who Can Apply, Thresholds and Steps

Understanding how to file for insolvency in India has become significantly more important since the Insolvency and Bankruptcy Code (Amendment) Act, 2026 received presidential assent in April 2026. The amendment streamlines admission triggers, tightens resolution timelines and introduces procedural changes that affect every stakeholder, from corporate debtors and financial creditors to individual guarantors and sole proprietors. Whether you are a company director facing mounting debt, a creditor pursuing an unpaid claim, or an individual weighing personal insolvency, the filing route you choose (NCLT, DRT or District Court) and the evidence you assemble will determine the speed and outcome of proceedings. This guide translates the 2026 changes into a practical, step-by-step process.

Quick steps to file for insolvency in India (2026):

1. Determine your eligibility category (corporate debtor, creditor, individual or personal guarantor).
2. Confirm the minimum default threshold applicable to your petition type.
3. Identify the correct forum, NCLT for companies and LLPs, DRT for individuals and personal guarantors, or District Court under legacy provincial acts.
4. Prepare the petition bundle (prescribed forms, statement of default, supporting evidence, proposed insolvency resolution professional where required) and file with the applicable tribunal.

Last reviewed: 19 May 2026

Who Can File for Insolvency in India?

The Insolvency and Bankruptcy Code, 2016 (IBC), as amended in 2026, recognises several categories of applicants who may initiate insolvency proceedings. Identifying the correct category is the first compliance decision because it determines which tribunal has jurisdiction, which forms to use and what evidence must accompany the petition.

Companies and LLPs, Who Files, Thresholds and Forum

For corporate entities, the CIRP NCLT process is the primary route. Three classes of applicant may trigger the Corporate Insolvency Resolution Process (CIRP):

• Financial creditors, banks, NBFCs, bondholders or any person to whom a financial debt is owed. They file under Section 7 of the IBC.
• Operational creditors, suppliers of goods or services, employees and government bodies owed statutory dues. They file under Section 9 after issuing a demand notice and waiting the prescribed period.
• The corporate debtor itself, the company’s board or partners of an LLP may file under Section 10, effectively a voluntary petition.

All corporate petitions are filed at the NCLT bench that has jurisdiction over the registered office of the corporate debtor. The IBC Amendment Act, 2026 has introduced refinements to the admission stage, industry observers expect that revised admission triggers will reduce the scope for procedural objections that previously delayed NCLT hearings.

Individuals, Sole Proprietors and Personal Guarantors

Yes, an individual can file for insolvency in India. Parts III and IV of the IBC cover individual insolvency in India, although their operationalisation has been phased. As of 2026, the provisions relating to personal guarantors to corporate debtors (Section 95 onwards) are fully notified and active. For other individuals and sole proprietors, the framework continues to evolve, with DRT or the relevant District Court serving as the adjudicating authority depending on the nature of the debt and whether the individual is a guarantor linked to a corporate CIRP.

Where Part III has not yet been notified for a particular debtor class, legacy provincial insolvency statutes, such as the Presidency Towns Insolvency Act, 1909, and the Provincial Insolvency Act, 1920, may still technically apply, although their practical use is increasingly limited.

Who Cannot File, Key Exclusions

Not every entity or individual may trigger insolvency proceedings under the IBC. The following are notable exclusions:

• Corporate debtors already undergoing CIRP or liquidation, a fresh petition cannot be filed during an existing moratorium.
• Entities specifically excluded by government notification, certain financial service providers have separate resolution frameworks (e.g., under Section 227 read with FRDI-related rules).
• Disputed operational debts, an operational creditor cannot file where the debtor has raised a genuine dispute or established a pre-existing right of set-off.

Minimum Thresholds and Monetary Limits After the IBC Amendment Act, 2026

The minimum threshold to initiate insolvency is one of the most frequently asked questions in Indian bankruptcy practice. Before the pandemic-era notification, the original IBC floor for corporate CIRP was ₹1 lakh. A 2020 notification raised this to ₹1 crore, a change that has remained in effect through the 2026 amendment cycle. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 has not altered this ₹1 crore floor for corporate applications; instead, it has focused on streamlining admission mechanics and resolution timelines.

For individual insolvency and personal guarantor proceedings, the statutory minimum under Section 78 of the IBC is ₹1,000. In practice, insolvency petitions by or against personal guarantors typically involve exposures running into several crore, as they are linked to corporate defaults. Practitioners should note that the Central Government retains the power to revise these thresholds by notification.

The practical implication is clear: small and medium-sized operational creditors whose individual claim falls below ₹1 crore may need to explore collective filing strategies or consider other recovery mechanisms such as SARFAESI or civil suit remedies, unless the aggregate default breaches the threshold.

Where to File, NCLT vs DRT vs District Court

Choosing the correct forum when learning how to file for insolvency in India is critical. Filing in the wrong tribunal will result in the petition being returned or dismissed, costing months in wasted time. The table below provides a jurisdiction matrix.

Jurisdiction decision flowchart (textual): Is the debtor a company or LLP? → File at the NCLT bench where its registered office is located. Is the debtor a personal guarantor to a corporate debtor? → If a CIRP is already pending, the NCLT may have jurisdiction; otherwise, file an insolvency petition at the DRT. Is the debtor a non-guarantor individual or sole proprietor? → Check whether IBC Part III has been notified for the relevant class; if not, proceed under the applicable provincial insolvency act at the District Court.

Step-by-Step: How to File an Insolvency Petition (DRT and NCLT)

This section is the core how-to. The insolvency process in India follows two parallel procedural streams depending on whether the debtor is a corporate entity or an individual. Both routes are laid out below with numbered steps, document requirements and practitioner guidance reflecting the Insolvency and Bankruptcy Code (Amendment) Act, 2026.

Filing a CIRP Petition at the NCLT (Corporate Entities)

1. Identify the ground and section. A financial creditor files under Section 7, an operational creditor under Section 9 (after issuing the statutory demand notice under Section 8), and the corporate debtor itself under Section 10. Each section has a distinct prescribed form.
2. Prepare the statement of default. This is the backbone of the petition. For financial creditors, evidence typically includes the loan agreement, sanction letter, records from an information utility (such as the National E-Governance Services Limited, NeSL) confirming the debt and default, and bank statements showing non-payment. Operational creditors must attach the invoice or demand notice, proof of delivery, and evidence that the statutory ten-day notice period under Section 8 has expired without payment or a valid dispute being raised.
3. Nominate an Interim Resolution Professional (IRP). The petition must include the written consent of a registered insolvency professional willing to act as IRP. The 2026 amendment has introduced flexibility here: industry observers expect that where an applicant does not nominate an IRP, the NCLT will be empowered to appoint one from the IBBI panel, reducing a frequent cause of petition rejections. However, practitioners should still nominate an IRP proactively wherever possible to avoid delays.
4. Pass a board resolution (corporate debtor self-filing). If the corporate debtor itself is filing under Section 10, a board resolution or partners’ resolution (for an LLP) authorising the filing must be annexed. This resolution should also record the debtor’s admission that a default has occurred.
5. Calculate and pay the filing fee. NCLT fees are prescribed under the NCLT Rules and typically involve a modest application fee plus any process-serving fees. Fees vary by bench but are generally modest compared to civil court ad valorem fees.
6. Compile and file the petition bundle. The final bundle includes the completed prescribed form, statement of default with annexures, IRP consent letter, board resolution (if applicable), proof of service of demand notice (operational creditors), and an affidavit verifying all statements. E-filing is available at most NCLT benches.
7. Serve notice on the corporate debtor (if creditor-filed). Once the NCLT registry accepts the petition, notice is issued to the corporate debtor to file a reply, typically within fourteen days. The NCLT must admit or reject the application within the timelines tightened under the 2026 amendment.
8. Admission and moratorium. On admission, the NCLT declares a moratorium under Section 14, which halts all pending suits, enforcement actions and asset disposals against the debtor. The IRP takes charge of the corporate debtor’s affairs.
9. Formation of the Committee of Creditors (COC) and CIRP commencement. The IRP issues a public notice calling for claims. Financial creditors form the COC. The resolution period, as tightened under the 2026 framework, begins from the date of admission.

Practitioner tips: Prioritise evidence from information utilities, NCLT benches routinely cite NeSL records as conclusive proof of default. Also be aware that the 2026 amendment strengthens scrutiny of avoidable transactions, so both applicants and debtors should audit all transfers made in the look-back period before filing. For a deeper analysis of how the 2026 changes affect creditor strategy, see the IBC Amendment Act 2026 impact on creditors.

Filing an Insolvency Petition at the DRT (Individuals and Personal Guarantors)

For those seeking to file an insolvency petition at the DRT, whether as an individual debtor, a personal guarantor, or a creditor pursuing a guarantor, the process under Parts III and IV of the IBC is distinct from the corporate CIRP route.

1. Compile a complete list of creditors and debts. The applicant must prepare a schedule listing every creditor, the nature and amount of each debt, and the date of default. For personal guarantors, this includes the guarantee agreement and evidence of the underlying corporate default.
2. Prepare an asset schedule. A full disclosure of assets, immovable property, bank accounts, investments, vehicles and any other material assets, must accompany the petition. Incomplete disclosure is a common ground for dismissal.
3. Draft and swear the affidavit of default. An affidavit confirming the inability to pay debts as they fall due is required. This is distinct from the “balance sheet” insolvency test; the focus is on cash-flow insolvency.
4. Gather supporting evidence. Attach certified copies of loan agreements, demand notices received from creditors, guarantee deeds, bank statements showing non-payment, and any correspondence demonstrating efforts to negotiate or restructure.
5. Complete the prescribed form and pay court fees. DRT filing forms are prescribed under the IBC (Application to Adjudicating Authority) Rules. Court fees are typically nominal. The forms can be obtained from the relevant DRT registry or downloaded from the DRT electronic filing portal.
6. File the petition at the appropriate DRT. Jurisdiction is determined by the location where the applicant ordinarily resides or carries on business. If the personal guarantor’s insolvency is connected to a corporate CIRP already pending before the NCLT, practitioners should check whether the NCLT or the DRT has jurisdiction, the Supreme Court has clarified that both forums may be involved depending on the stage of proceedings.
7. Interim moratorium and appointment of resolution professional. Upon filing (and in some cases upon admission), Section 96 provides for an interim moratorium that protects the individual debtor from enforcement actions. The DRT may appoint a resolution professional to examine the debtor’s affairs and prepare a repayment plan.

Practitioner tips: Negotiation windows before a DRT petition is admitted are valuable. Creditors are often more willing to agree to structured repayment once a petition is on file but before formal admission. Also note that garnishee orders and attachment proceedings may be stayed once the interim moratorium takes effect, plan cash-flow management accordingly.

Filing checklist (quick reference):

• Completed prescribed form (Section-specific: 7, 9, 10 for NCLT; Part III forms for DRT)
• Statement of default with annexures
• IRP / Resolution Professional consent letter
• Board resolution or partners’ resolution (corporate self-filing only)
• Demand notice and proof of service (operational creditors)
• Loan agreements, guarantee deeds and sanction letters
• NeSL / information utility records (corporate petitions)
• Asset schedule and creditor list (individual petitions)
• Affidavit verifying all statements
• Court fee payment receipt

Timeline Expectations Under the IBC Amendment Act, 2026

One of the central objectives of the Insolvency and Bankruptcy Code (Amendment) Act, 2026 is to compress timelines and reduce the backlog of cases that has plagued the CIRP NCLT process. The table below outlines the key stages and their expected duration.

The likely practical effect of the 2026 timeline reforms will be incremental rather than immediate. Benches with heavy dockets may still experience delays, but the statutory pressure on NCLTs to admit or reject within 14 days is expected to reduce the pre-admission bottleneck that has historically accounted for months of lost time.

What Happens After Admission, IRP, Moratorium, COC and Voting

Once an insolvency petition is admitted, a carefully sequenced process unfolds. For corporate CIRP, the Interim Resolution Professional (IRP) assumes management of the corporate debtor, displacing the existing board. The moratorium under Section 14 takes immediate effect, barring all creditors from pursuing individual enforcement actions, initiating or continuing lawsuits, or transferring the debtor’s assets.

The IRP issues a public announcement inviting claims from all creditors. Financial creditors, operational creditors and other stakeholders must submit their claims within the prescribed period. Verified financial creditors form the Committee of Creditors (COC), which becomes the decision-making body for the remainder of the CIRP.

The COC appoints a Resolution Professional (RP) to replace the IRP (or may choose to continue with the same professional). The RP invites, evaluates and presents resolution plans submitted by prospective resolution applicants. A resolution plan must be approved by at least 66% of the COC by voting share. If no viable resolution plan is approved within the statutory period, the corporate debtor proceeds to liquidation, a process governed by Sections 33–54 of the IBC. For an in-depth comparison of resolution and liquidation pathways, see restructuring vs liquidation, choosing the right path.

For individual insolvency cases admitted by the DRT, the resolution professional prepares a repayment plan that must be approved by the creditors. If no plan is feasible, the individual debtor may ultimately be adjudicated bankrupt, with assets vested in a bankruptcy trustee for distribution.

Where insolvency cases involve cross-border insolvency elements, additional complexities arise under the evolving framework that the 2026 amendment has begun to address.

Documents Required for an Insolvency Petition, Complete Checklist

Assembling the correct documents is the single most controllable factor in avoiding petition rejections. Below is a consolidated checklist of documents required for insolvency petition filings at both the NCLT and DRT.

For corporate CIRP petitions (NCLT):

• Completed Form 1 (financial creditor, Section 7), Form 5 (operational creditor, Section 9) or Form 6 (corporate debtor, Section 10)
• Certified copy of the loan or facility agreement, or contract for supply of goods/services
• Records from an information utility (NeSL) evidencing the debt and default
• Bank statements or ledger extracts demonstrating non-payment
• Demand notice under Section 8 and proof of delivery (operational creditors only)
• Board resolution or partners’ resolution authorising the filing (Section 10 applications)
• Written consent of the proposed IRP (Form 2)
• Audited financial statements for the three most recent financial years
• Affidavit under the relevant NCLT rules verifying the contents of the petition
• Proof of court fee payment

For individual / personal guarantor petitions (DRT):

• Prescribed application form under the IBC (Application to Adjudicating Authority) Rules
• Complete list of creditors with names, addresses and amounts owed
• Asset schedule (all immovable and movable assets, bank balances, investments)
• Guarantee deed and underlying loan documentation
• Affidavit of inability to pay debts as they fall due
• Demand notices received from creditors
• Evidence of any prior negotiation or restructuring attempts
• Identity and address proof (Aadhaar, PAN)
• Court fee payment receipt

Practical Tips, Common Mistakes and Red Flags

Even experienced practitioners encounter avoidable errors when filing insolvency petitions. The following tips can prevent costly delays:

• Do not file with incomplete evidence. The single most common reason for NCLT rejection is an insufficient statement of default. Always include NeSL records or certified bank statements, verbal claims of non-payment are not enough.
• Audit pre-petition asset transfers. The 2026 amendment strengthens the framework for avoidable transactions. Any transfer of assets at an undervalue during the look-back period (two years for transactions with related parties, one year otherwise) may be clawed back. Both debtors and creditors should review recent transfers before filing.
• Consider cross-border asset exposure. If the debtor or guarantor holds assets abroad, the moratorium’s enforceability outside India is limited. Coordinate with counsel in the relevant jurisdiction early.
• Settle when it makes sense. Filing an insolvency petition is not always the optimal strategy. The 90% COC threshold for withdrawal under Section 12A means that once proceedings are admitted, exiting requires near-unanimous creditor consent. Explore negotiated settlement before filing if the debtor shows genuine willingness to pay.
• Watch for judicial reversals. NCLT and NCLAT precedents shift frequently. Keep track of recent judgments on admission thresholds and disputed debt defences.

Where to Get Help

Navigating the insolvency filing process in India, particularly after the 2026 amendments, requires experienced legal counsel familiar with both NCLT and DRT practice. Global Law Experts maintains a directory of insolvency and bankruptcy specialists across India who can advise on petition preparation, strategy, IRP nomination and post-admission proceedings. For readers seeking specialist guidance on how to file for insolvency in India, connecting with a qualified practitioner early in the process is the most effective way to protect your interests and avoid procedural missteps.

Sources

1. Insolvency and Bankruptcy Board of India (IBBI), IBC Amendment Act, 2026 Summary
2. Insolvency and Bankruptcy Board of India (IBBI), Individual Insolvency Guidance and Forms
3. IBCLaws, President Assents to IBC Amendment Act, 2026
4. Cyril Amarchand Mangaldas, Client Alert: The IBC Amendment Act, 2026
5. CRISIL Ratings, IBC Amendment Act, 2026 Signals Intent to Expedite Resolutions
6. IndiaFilings, How to File an Insolvency Petition
7. Maheshwari & Co., Insolvency Proceedings for Individuals and Partnership Firms in India
8. National Company Law Tribunal (NCLT), Official Portal