Insolvency and Bankruptcy Code, 2016

Section 55: Fast Track Corporate Insolvency Resolution Process

Section 55 of the Insolvency and Bankruptcy Code, 2016 (IBC) establishes the fast track corporate insolvency resolution process (fast track CIRP) for notified categories of corporate debtors. This article explains eligibility, the statutory framework, the shorter timeline and the related provisions of Sections 56 to 58.

What is fast track corporate insolvency resolution?

Under Section 55(1), a corporate insolvency resolution process conducted in accordance with Chapter IV of Part II of the Code is known as a fast track corporate insolvency resolution process. It is a special procedure for eligible corporate debtors, rather than an automatic option for every small business or every default.

Section 55: statutory provisions explained

Section 55(1): meaning

The provision names the process undertaken under Chapter IV as the fast track corporate insolvency resolution process.

Section 55(2): eligible corporate debtors

An application may be made in respect of the following categories, subject to Central Government notification:

Section 55(2)(a): a corporate debtor whose assets and income are below levels notified by the Central Government;
Section 55(2)(b): a corporate debtor having a notified class of creditors or a notified amount of debt; or
Section 55(2)(c): another category of corporate persons notified by the Central Government.

The wording gives the Central Government power to specify eligible categories. Eligibility must therefore be checked against the applicable notification; the statutory text alone does not prescribe a universal asset, income or debt threshold.

Fast track CIRP time limit under Section 56

Section 56 generally provides a 90-day period from the insolvency commencement date. The Adjudicating Authority may allow a single extension of up to 45 days if the statutory requirements are met. The resolution professional must apply following the requisite committee of creditors approval under Section 56(2). The voting threshold stated in that provision is 75 per cent of voting share.

Important distinction: The 90-day fast track period should not be confused with the timelines governing ordinary CIRP or the separate pre-packaged insolvency resolution process.

How is the process initiated?

Section 57 provides for an application by a creditor or the corporate debtor, as the case may be, supported by proof of default and other prescribed material. Section 58 applies provisions of Chapter II to the fast track process, subject to the modifications provided by Chapter IV. Procedural requirements should be checked against the applicable rules, notifications and IBBI regulations.

Definitions of key legal terms

Corporate debtor: Under Section 3(8), a corporate person that owes a debt to any person.
Corporate person: Section 3(7) covers specified companies, limited liability partnerships and other incorporated persons, subject to statutory exclusions.
Default: Under Section 3(12), non-payment of debt when the whole or any part or instalment has become due and payable and is not paid.
Adjudicating Authority: For corporate persons, the National Company Law Tribunal (NCLT), as provided under Section 5(1).
Resolution professional: An insolvency professional appointed to conduct the corporate insolvency resolution process in accordance with the Code.

Fast track CIRP at a glance

Topic	Section / position
Nature of process	Section 55(1): process under Chapter IV
Eligibility	Section 55(2): categories notified by Central Government
Ordinary fast track deadline	Section 56: 90 days
Possible extension	Up to 45 days, once, subject to statutory conditions
Application	Section 57
Application of Chapter II	Section 58

Official legal sources and further reading

Legal information is general in nature. Confirm the applicable commencement notifications, amendments, regulations and judicial interpretation before relying on a provision for a particular case.