Insolvency and Bankruptcy Code, 2016 | Section 20

Section 20: Management of Corporate Debtor as a Going Concern

Section 20 requires the interim resolution professional (IRP) to make every endeavour to preserve the corporate debtor's property value and maintain its operations as a going concern during the corporate insolvency resolution process (CIRP). It also identifies practical powers available to the IRP.

Core principle: Insolvency proceedings do not automatically require business operations to stop. The IRP must seek to maintain viable operations while acting within the Code and applicable regulations.

Section 20: Statutory provisions

20(1). The interim resolution professional shall make every endeavour to protect and preserve the value of the property of the corporate debtor and manage the operations of the corporate debtor as a going concern.

20(2). For the purposes of sub-section (1), the interim resolution professional shall have the authority—

to appoint accountants, legal or other professionals as may be necessary;
to enter into contracts on behalf of the corporate debtor or to amend or modify the contracts or transactions which were entered into before the commencement of corporate insolvency resolution process;
to raise interim finance provided that no security interest shall be created over any encumbered property of the corporate debtor without the prior consent of the creditors whose debt is secured over such encumbered property:
Provided that no prior consent of the creditor shall be required where the value of such property is not less than the amount equivalent to twice the amount of the debt.
to issue instructions to personnel of the corporate debtor as may be necessary for keeping the corporate debtor as a going concern; and
to take all such actions as are necessary to keep the corporate debtor as a going concern.

Meaning of key legal expressions

Corporate debtor

Under Section 3(8), a corporate debtor is a corporate person who owes a debt to any person. The term “corporate person” is defined in Section 3(7), subject to the exclusions specified there.

Interim resolution professional (IRP)

An insolvency professional appointed under Section 16 to perform initial CIRP functions. Under Section 17, management of the corporate debtor vests in the IRP upon appointment, with the board's or partners' powers suspended as specified by law.

Going concern

A business that continues operating rather than being immediately shut down or broken up. In Section 20, the focus is on preserving enterprise value, continuity of essential operations and the prospects of resolution.

Interim finance

Section 5(15) defines interim finance as financial debt raised by the resolution professional during the insolvency resolution process, together with such other debt as may be notified. It may support ongoing operations, subject to the Code's conditions.

Security interest and encumbered property

Section 3(31) defines security interest broadly as rights or interests in property created in favour of a secured creditor by a transaction securing payment or performance of an obligation, subject to statutory exclusions. Encumbered property is property already subject to such an interest.

Powers and responsibilities under Section 20(2)

Appointing professionals

The IRP may engage accountants, lawyers and other necessary professionals to support compliance, financial oversight, asset protection and operational continuity. Applicable IBBI regulations and professional standards remain relevant.

Entering into or modifying contracts

The IRP may contract on the corporate debtor's behalf and amend or modify pre-CIRP contracts or transactions as permitted by law. Section 20 does not automatically override every contractual right, statutory restriction or required approval.

Raising interim finance

The IRP can arrange interim funding. Creating a new security interest over property already encumbered ordinarily requires prior consent from creditors secured by that property. The statutory exception applies where the property's value is at least twice the secured debt amount. Other relevant requirements must also be considered.

Directing personnel and maintaining operations

The IRP may instruct corporate debtor personnel and take necessary operational steps to maintain the business. Section 19 separately requires personnel, promoters and persons associated with management to cooperate with the IRP.

Section 17: Transfer of management powers to the IRP.
Section 18: Initial duties, including information gathering and taking control and custody of relevant assets.
Section 19: Assistance and cooperation by personnel and promoters.
Sections 22 and 23: Appointment of the resolution professional and continuation of CIRP management.
Section 28: Committee of creditors' approval for specified actions by the resolution professional, where applicable.

Practical significance for stakeholders

For employees and suppliers, going-concern management may help sustain ordinary operations, subject to funding and legal constraints. For creditors, preserving the debtor's operating value may improve the prospects of a viable resolution. For the IRP, Section 20 provides an operational mandate but does not remove obligations under the wider Code, IBBI regulations and applicable judicial directions.

Official legal sources and further reading

Updated: 21 October 2026. The statutory text above follows the Section 20 wording reproduced on the original page. For changes in commencement, applicability or interpretation, consult the current official Act, amendment notifications and applicable regulations. This article is general legal information, not case-specific advice.