Section 38: Consolidation of Claims in Liquidation

What is consolidation of claims under Section 38?

Section 38 of the Insolvency and Bankruptcy Code, 2016 (IBC) governs the receipt and collection of creditors' claims during the liquidation of a corporate debtor. It establishes a statutory 30-day collection period, distinguishes the methods for financial and operational creditors, and permits a creditor to withdraw or vary a submitted claim within 14 days. The liquidator subsequently verifies claims under Section 39 and decides on admission or rejection under Section 40.

Section 38 explained: Subsections (1) to (5)

Section 38(1): Collection within 30 days

The liquidator must receive or collect creditors' claims within 30 days from commencement of the liquidation process. Creditors should follow the public announcement and submit evidence within the applicable deadline. The 30-day period is measured from liquidation commencement, not from the date on which an individual creditor learns about the liquidation.

Section 38(2): Claims by financial creditors

A financial creditor may submit its claim by providing a record of the claim with an information utility. Where the information is not recorded with an information utility, the financial creditor may submit the claim in the manner applicable to operational creditors under subsection (3).

Section 38(3): Claims by operational creditors

An operational creditor may submit a claim in the form and manner specified by the Insolvency and Bankruptcy Board of India (IBBI), together with supporting documents proving the debt. Applicable claim forms and evidentiary requirements are prescribed in the IBBI (Liquidation Process) Regulations, 2016, as amended.

Section 38(4): Creditors holding both types of debt

Where the same creditor has both financial debt and operational debt, it must submit the financial-debt portion according to subsection (2) and the operational-debt portion according to subsection (3). Each portion should be documented and classified appropriately.

Section 38(5): Withdrawal or variation

A creditor may withdraw or vary its claim within 14 days after submitting it. This is a separate time limit from the 30-day claim collection period. Any change should be communicated to the liquidator with relevant supporting material.

Important legal definitions

Financial creditor - Section 5(7)

A person to whom a financial debt is owed, including a person to whom such debt has been legally assigned or transferred.

Financial debt - Section 5(8)

Debt, along with interest if any, disbursed against consideration for the time value of money, including the categories specified in that provision.

Operational creditor - Section 5(20)

A person to whom an operational debt is owed, including an assignee or transferee.

Operational debt - Section 5(21)

A claim in respect of goods or services, including employment, or a debt relating to dues payable to government or a local authority under law.

Information utility - Section 3(21)

A person registered with the IBBI as an information utility under Section 210.

Liquidator

The insolvency professional appointed to conduct liquidation under Section 34 of the IBC.

Practical claim submission checklist

1. Review the liquidator's public announcement and confirm the liquidation commencement date.
2. Identify whether the claim is financial, operational, or a combination of both.
3. Use the applicable claim form and submission channel under the current IBBI regulations.
4. Attach invoices, agreements, account statements, orders, or other evidence relevant to the claim.
5. Keep proof of submission and respond promptly to any verification requests.
6. Where necessary, vary or withdraw the claim within 14 days of submission.

Forms and filing procedures may be changed by regulatory amendments or circulars. Consult the current IBBI circulars and regulations before filing.

Related provisions of the IBC

Section 33 deals with initiation of liquidation; Section 34 concerns appointment of the liquidator; Section 35 sets out the liquidator's powers and duties; Section 37 governs access to information; Section 39 addresses verification of claims; Section 40 addresses admission or rejection of claims; and Section 42 provides for appeals against the liquidator's decision. Distribution of liquidation proceeds is governed by Section 53.

Read the Insolvency and Bankruptcy Code, 2016 overview.

Official legal resources

For the current text of the law and procedural requirements, consult the IBBI Liquidation Process Regulations (updated through 2 June 2026), IBBI legal framework and India Code. This article is an explanatory guide and should be read alongside the legislation, amendments, notifications and applicable orders.