Beyond Admission: The CIRP Phase and How Outcomes Are Determined
In an earlier post, we highlighted how admission under Section 9 of the Insolvency and Bankruptcy Code sharply curtails strategic flexibility, marking one of the last points at which promoters can still meaningfully influence outcomes before CIRP takes over.
This post examines what unfolds in its aftermath.
From a procedural perspective, admission into CIRP is a clean break. A moratorium is imposed, the board stands suspended, and the promoters are effectively sidelined. Control over operational management and key decisions shifts to the Interim Resolution Professional, and soon thereafter, to the Committee of Creditors (CoC). From here on, the company is run to suit creditor priorities and statutory timelines, not promoter intent. With only 180 days on the court-supervised clock (extendable once by 90 days at the NCLT’s discretion), the conversation quickly shifts from recovery to damage control and value preservation.
From an outcome perspective, CIRP can end in only three ways: withdrawal following settlement, approval of a resolution plan, or liquidation. While these outcomes are prescribed by law, they are rarely linear and the path to each is shaped by behaviour, timing, and strategic choices made during the process.What is often overlooked is that while operational authority is lost, CIRP is not a phase of promoter disengagement.
Influence shifts from control to conduct. Settlement viability, eligibility under Section 29A, engagement with potential bidders, cooperation during information flow, and consistency of approach directly shape creditor confidence and resolution outcomes. With the commercial wisdom of the CoC carrying decisive weight, early alignment with creditor expectations becomes the primary lever through which promoters can continue to influence outcomes.
This is where informed strategy matters the most.
The difference between value erosion and value preservation often lies in how early promoters recognise the loss of control and shift their focus to outcome management. A capable financial advisor helps promoters identify where leverage still exists, evaluate realistic settlement or resolution paths, manage financial exposure, and engage constructively within the IBC framework.
At Srishti Capital Advisors (SCA), we work closely with promoters and stakeholders through CIRP, focusing on clarity under pressure, disciplined execution, and preservation of enterprise value in situations where control has already slipped, but outcomes are still very much in play.
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