Section 5 IBC 2016: Definitions for Corporate Insolvency
Section 5 defines the key expressions used in Part II of the Insolvency and Bankruptcy Code (IBC), 2016, governing insolvency resolution and liquidation of corporate persons.
Section 5: Clause-by-clause definitions
Under section 5, the following expressions apply in Part II unless the context otherwise requires. The descriptions below summarise the statutory provisions and retain the clause numbering for reference.
Section 5(1) - Adjudicating Authority
The National Company Law Tribunal (NCLT), constituted under section 408 of the Companies Act, 2013, is the adjudicating authority for Part II.
Section 5(2) - Auditor
A chartered accountant entitled to practise under section 6 of the Chartered Accountants Act, 1949.
Section 5(2A) - Base resolution plan
A resolution plan provided by the corporate debtor under section 54A(4)(c) for a pre-packaged insolvency resolution process.
Section 5(3) - Chapter
A chapter within Part II of the Code.
Section 5(4) - Constitutional document
Includes a company's memorandum and articles of association and the incorporation documents of a limited liability partnership.
Section 5(5) - Corporate applicant
Includes the corporate debtor; a duly authorised member or partner; the individual managing its operations and resources; or a person controlling and supervising its financial affairs. Authorisation may cover CIRP or pre-packaged insolvency, as applicable.
Section 5(5A) - Corporate guarantor
A corporate person that stands surety under a contract of guarantee for a corporate debtor.
Section 5(6) - Dispute
Includes suits or arbitration proceedings about the existence or amount of a debt, quality of goods or services, or breach of a representation or warranty. The word includes is not necessarily exhaustive.
Section 5(7) - Financial creditor
A person to whom financial debt is owed, including a lawful assignee or transferee.
Section 5(8) - Financial debt
Debt, with interest if any, disbursed against consideration for the time value of money. The inclusive categories cover interest-bearing borrowings; acceptance credit; bonds, notes and debentures; qualifying finance leases; recourse receivables financing; transactions having the commercial effect of borrowing; derivatives valued at market value; bank counter-indemnities; and guarantees or indemnities of those obligations. Amounts raised from allottees under real estate projects are deemed to have the commercial effect of borrowing; allottee and real estate project draw on the Real Estate (Regulation and Development) Act, 2016.
Section 5(9) - Financial position
Financial information concerning a person as at a particular date.
Section 5(10) - Information memorandum
The memorandum prepared by the resolution professional under section 29(1), read with applicable IBBI regulations.
Section 5(11) - Initiation date
The date a financial creditor, operational creditor or corporate applicant files an application with the adjudicating authority to commence CIRP.
Section 5(12) - Insolvency commencement date
The date on which the adjudicating authority admits an application under section 7, 9 or 10; this is distinct from the filing date.
Section 5(13) - Insolvency resolution process costs
Includes interim finance and raising costs; resolution professional fees; costs of operating the corporate debtor as a going concern; government-incurred facilitation costs; and further costs specified by IBBI regulations.
Section 5(14) - Insolvency resolution process period
The initial 180-day period from the insolvency commencement date. Extensions and overall limits are governed by section 12, not this definition alone.
Section 5(15) - Interim finance
Financial debt raised by the resolution professional during CIRP.
Section 5(16) - Liquidation cost
Costs incurred by the liquidator during liquidation, subject to applicable IBBI regulations.
Section 5(17) - Liquidation commencement date
The date liquidation proceedings commence under section 33 or voluntary liquidation under section 59, as applicable.
Section 5(18) - Liquidator
An insolvency professional appointed as liquidator under Chapter III or Chapter V of Part II.
Section 5(19) - Officer
For Chapter VII offences, the relevant officer in default under section 2(60) of the Companies Act, 2013, or designated partner under the LLP Act, 2008.
Section 5(20) - Operational creditor
A person owed an operational debt, including its lawful assignee or transferee.
Section 5(21) - Operational debt
Claims concerning provision of goods or services, including employment, and legally payable dues to central, state or local government authorities.
Section 5(22) - Personal guarantor
An individual who is surety under a contract of guarantee for a corporate debtor.
Section 5(23) - Personnel
Includes directors, managers, key managerial personnel, designated partners and employees of the corporate debtor.
Section 5(24) - Related party (corporate debtor)
A detailed connected-person test covering directors, partners, key managerial personnel and relatives; connected partnerships and companies; persons directing or being directed by management; holding, subsidiary and associate companies; persons with more than 20 percent voting control in either direction; control over board composition; and specified policy-making, common-director, managerial or technical relationships. Each statutory sub-clause (a) to (m) must be checked against the facts.
Section 5(24A) - Related party (individual)
For an individual, covers relatives, specified partnerships and LLPs, trustees of trusts benefiting the individual or relatives, certain companies where the individual or relatives hold significant shareholding or directorships, and other relationships specified in the statutory definition. The statutory explanation sets out the meaning of relative.
Section 5(25) - Resolution applicant
A person, acting alone or jointly, who submits a resolution plan to the resolution professional following an invitation under section 25(2)(h), or under section 54K for a pre-packaged process. Eligibility is separately restricted by section 29A.
Section 5(26) - Resolution plan
A plan submitted by a resolution applicant to resolve the corporate debtor as a going concern under Part II. It may include restructuring, including merger, amalgamation or demerger, subject to the Code.
Section 5(27) - Resolution professional
An insolvency professional appointed to conduct CIRP, including an interim resolution professional.
Section 5(28) - Voting share
A financial creditor's proportion of voting rights in the committee of creditors, based on its share of the corporate debtor's financial debt, subject to the Code's special voting provisions.
How these definitions affect corporate insolvency
Who can apply: Sections 7, 9 and 10 govern applications by financial creditors, operational creditors and corporate applicants respectively. The definition of financial debt under section 5(8) is central to identifying a financial creditor under section 5(7); section 5(21) identifies operational debt.
When the process begins: The initiation date in section 5(11) is the filing date, while the insolvency commencement date in section 5(12) is the admission date. Section 12 governs CIRP time limits, including extensions and applicable exclusions.
Who may submit a plan: A resolution applicant under section 5(25) must meet the eligibility requirements of section 29A. A resolution plan is assessed under sections 30 and 31 and the applicable regulations. Related-party status under sections 5(24) and 5(24A) may have consequences for participation and eligibility, depending on the specific provision.
Homebuyers: The explanation to section 5(8)(f) treats amounts raised from allottees under real estate projects as having the commercial effect of borrowing. Rights and procedures remain subject to the Code and relevant judicial interpretation.
Official legal sources and further reading
Refer to the Insolvency and Bankruptcy Code, 2016 (IBBI consolidated text), the IBBI updated legal framework, the IBBI CIRP Regulations (amended up to 25 February 2026) and the Application to Adjudicating Authority Rules, 2016.
Read also: The Insolvency and Bankruptcy Code, 2016 - overview.
Last reviewed: 21 October 2026. Legal developments should be checked against the official gazette and currently operative notifications before relying on a provision.