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What does IRP (Insolvency resolution process) mean?

IRP stands for Corporate Insolvency resolution process. It is a process under the Act Insolvency and Bankruptcy Code, 2016. (The Insolvency and Bankruptcy Code, 2016 (IBC) is the bankruptcy law of India).

In case a corporate debtor makes a default in repayment of dues of the creditors, the financial creditor/s, has the power to start the insolvency resolution process. In order to initiate the resolution process, an application has to be made to National Company Law Tribunal (NCLT).

The claims of the Creditors (i.e company assets) shall be frozen for a period of six months on admission of application by NCLT. During this time, the NCLT shall listen to the options to revive and decide the future course of action, either debt resolution, corporate restructuring or liquidation. This process happens in stages.

Additional surveillance mechanism by the exchanges will be applicable on such stocks. Intraday trading and BTST will not be allowed and 100% margins will be applicable.