Insolvency resolution in India typically follows a fixed 270-day time frame. However, for smaller corporations, this duration may be unnecessarily long. In many instances, creditors can complete negotiations and reach a decision much earlier, making the standard process inefficient for such cases.
Recognising this, the Bankruptcy Law Reform Committee (BLRC), in its landmark 2015 report—which laid the foundation for India's insolvency regime—emphasised the need for differentiated procedures. The committee stated that "there is merit in creating explicit provisions" for cases that could be resolved in a shorter time span.
Categories Suitable for a Fast Track Process
The BLRC identified three categories of entities for which a streamlined procedure could be appropriate:
- Entities with small-scale operations
- Entities with non-complex creditor structures
- Other corporates that may be identified in the future
The committee proposed that the primary distinction between a typical Corporate Insolvency Resolution Process (CIRP) and a Fast Track Corporate Insolvency Resolution Process (Fast Track CIRP) should be the duration. It recommended that the latter be completed in half the time required for a standard CIRP.
Eligibility Criteria for Fast Track CIRP
The Fast Track CIRP is codified under the Insolvency and Bankruptcy Code, 2016 (IBC) and has been available since June 2017. Under Indian law, the eligibility criteria for Fast Track CIRP include:
- Companies defined as "small" under the Companies Act, with a paid-up share capital of less than INR 40 million or an annual turnover under INR 400 million
- Unlisted companies with assets not exceeding INR 10 million
While the standard CIRP under the IBC must be completed within 180 days (extendable by 90 days, plus up to 60 days for litigation delays—totalling up to 330 days), the Fast Track CIRP has a much shorter timeline. It must be completed within 90 days, with a possible 45-day extension.
Even this extension is conditional. It requires the approval of at least 75% of the financial creditors and must be ratified by the adjudicating authority—the National Company Law Tribunal (NCLT)—which will only grant an extension if it is convinced that the process cannot be concluded within the initial 90 days.
The framework governing Fast Track CIRP is outlined in Sections 55 to 58 of the IBC, along with the corresponding regulations issued by the Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations.
Effectiveness and Challenges
Despite its promise, the Fast Track CIRP has seen limited uptake. One reason may be that, despite the reduced timelines, the process mirrors the standard CIRP in procedural requirements. This lack of differentiation may have limited its practical appeal, especially for small companies hoping for a simplified approach.
The Insolvency Law Committee's 2018 Report acknowledged this limitation and recommended against continuing with the separate fast-track mechanism. However, subsequent amendments to the IBC between 2018 and 2023 did not address or modify the Fast Track CIRP provisions.
In early 2023, the Government of India sought public comments on proposed changes to the insolvency framework. Among the proposals was a reimagined Fast Track CIRP that would allow financial creditors to approve a resolution plan through an informal, out-of-court process. Under this proposal, court involvement would be limited to the final approval of the resolution plan. The required creditor approval threshold for this model would be 66%, in line with existing norms for standard CIRP.
Notably, the proposal does not yet clarify which procedural steps could be omitted or how much time could be saved. It remains uncertain whether and when these changes will be implemented—and if so, whether they will make the fast-track process a more practical and attractive option for smaller insolvencies.
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