{"id":8695,"date":"2025-03-01T11:52:03","date_gmt":"2025-03-01T11:52:03","guid":{"rendered":"https:\/\/www.caindelhiindia.com\/blog\/?p=8695"},"modified":"2025-11-17T18:47:48","modified_gmt":"2025-11-17T18:47:48","slug":"dos-donts-for-ips-during-moratorium-under-ibc","status":"publish","type":"post","link":"https:\/\/www.caindelhiindia.com\/blog\/dos-donts-for-ips-during-moratorium-under-ibc\/","title":{"rendered":"Do\u2019s &#038; Don\u2019ts for IPs During Moratorium under IBC"},"content":{"rendered":"<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-8696\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2025\/03\/IBC-.-.jpg\" alt=\"IBC .\" width=\"1188\" height=\"735\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2025\/03\/IBC-.-.jpg 656w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2025\/03\/IBC-.--300x186.jpg 300w\" sizes=\"(max-width: 1188px) 100vw, 1188px\" \/><\/h2>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69daba070ba50\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69daba070ba50\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caindelhiindia.com\/blog\/dos-donts-for-ips-during-moratorium-under-ibc\/#Moratorium_under_Insolvency_and_Bankruptcy_Code_IBC_2016\" title=\"Moratorium under Insolvency and Bankruptcy Code (IBC), 2016\">Moratorium under Insolvency and Bankruptcy Code (IBC), 2016<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caindelhiindia.com\/blog\/dos-donts-for-ips-during-moratorium-under-ibc\/#Legal_Basis_for_Moratorium\" title=\"Legal Basis for Moratorium\">Legal Basis for Moratorium<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caindelhiindia.com\/blog\/dos-donts-for-ips-during-moratorium-under-ibc\/#Scope_of_Moratorium\" title=\"Scope of Moratorium\">Scope of Moratorium<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caindelhiindia.com\/blog\/dos-donts-for-ips-during-moratorium-under-ibc\/#Dos_and_Donts_for_Insolvency_Professionals_IPs_During_Moratorium\" title=\"Do\u2019s and Don\u2019ts for Insolvency Professionals (IPs) During Moratorium\">Do\u2019s and Don\u2019ts for Insolvency Professionals (IPs) During Moratorium<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caindelhiindia.com\/blog\/dos-donts-for-ips-during-moratorium-under-ibc\/#%E2%9D%8C_Donts_Actions_to_Avoid\" title=\"\u274c Don\u2019ts (Actions to Avoid)\">\u274c Don\u2019ts (Actions to Avoid)<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Moratorium_under_Insolvency_and_Bankruptcy_Code_IBC_2016\"><\/span><span style=\"color: #000080;\"><strong>Moratorium under Insolvency and Bankruptcy Code (IBC), 2016<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The moratorium is a key feature of IBC, ensuring the Corporate Debtor\u2019s assets remain protected during CIRP, thereby maximizing resolution opportunities. It balances creditors&#8217; rights with the debtor\u2019s need for restructuring, preventing disruptive enforcement actions. The moratorium is a temporary suspension of legal proceedings and enforcement actions against the Corporate Debtor during the Corporate Insolvency Resolution Process (CIRP).<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Legal_Basis_for_Moratorium\"><\/span><span style=\"color: #000080;\"><strong>Legal Basis for Moratorium<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Section 14 of IBC, 2016 \u2013 Moratorium on judicial proceedings, enforcement actions, and asset transfers. Section 14 of the IBC, 2016 mandates that upon admission of a CIRP application by the National Company Law Tribunal (NCLT), a moratorium is automatically imposed.<\/li>\n<li>Duties of an Insolvency Professional under IBC ensuring control of assets and operations, enforcing the moratorium, and managing the corporate debtor as a going concern.<\/li>\n<li><span style=\"color: #000080;\"><strong>Duration of Moratorium<\/strong><\/span>\n<ul>\n<li>Commencement: From the date of admission of CIRP by the NCLT.<\/li>\n<li>Termination: On the approval of a resolution plan or liquidation order by NCLT.<\/li>\n<\/ul>\n<\/li>\n<li><span style=\"color: #000080;\"><strong>Purpose of Moratorium<\/strong><\/span><\/li>\n<li>Protection of Corporate Debtor\u2019s Assets: Prevents creditors from initiating enforcement actions that could disrupt resolution efforts.<\/li>\n<li>Facilitation of Resolution: Allows the Resolution Professional (RP) to formulate a resolution plan without external pressures.<\/li>\n<li>Avoidance of Multiple Proceedings: Ensures a single forum (NCLT) handles all matters related to the corporate debtor.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Scope_of_Moratorium\"><\/span><span style=\"color: #000080;\"><strong>Scope of Moratorium<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"color: #000080;\"><strong>Prohibited Actions (During Moratorium)<\/strong><\/span><\/p>\n<ul>\n<li>No institution or continuation of suits or legal proceedings against the Corporate Debtor.<\/li>\n<li>No enforcement of security interests under the SARFAESI Act or otherwise.<\/li>\n<li>No recovery or alienation of assets by any creditor.<\/li>\n<li>No termination of essential contracts that are necessary for business continuity.<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>Permitted Actions (During Moratorium)<\/strong><\/span><\/p>\n<ul>\n<li>Continuation of pending proceedings before the Supreme Court and High Courts under Article 226 &amp; 227 of the Constitution.<\/li>\n<li>Criminal proceedings (e.g., fraud or misappropriation cases) are not affected.<\/li>\n<li>Proceedings under tax laws such as GST, Income Tax, and regulatory compliance matters can continue.<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>Exceptions to Moratorium (Judicial Precedents &amp; Amendments)<\/strong><\/span><\/p>\n<ul>\n<li>Personal Guarantors \u2013 The Supreme Court ruled that proceedings against personal guarantors of the Corporate Debtor are not covered under moratorium.<\/li>\n<li>Criminal Proceedings \u2013 Cases involving fraud, misrepresentation, or violations of law do not get suspended.<\/li>\n<li>Writ Petitions \u2013 The moratorium does not apply to writ petitions under Article 226 &amp; 227 before the High Court.<\/li>\n<li>Public Utility Services \u2013 Essential services (water, electricity, telecommunications) cannot be terminated but may require continued payments.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Dos_and_Donts_for_Insolvency_Professionals_IPs_During_Moratorium\"><\/span><span style=\"color: #000080;\"><strong>Do\u2019s and Don\u2019ts for Insolvency Professionals (IPs) During Moratorium<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>As per Section 14 of the Insolvency and Bankruptcy Code (IBC), 2016, once the Corporate Insolvency Resolution Process (CIRP) is admitted by the National Company Law Tribunal (NCLT), the moratorium period is enforced. Insolvency Professionals (IPs) play a critical role in ensuring compliance with the moratorium provisions.<\/p>\n<p><span style=\"color: #000080;\"><strong>Do\u2019s (Obligations of Insolvency Professionals)<\/strong><\/span><\/p>\n<p><span style=\"color: #000080;\">\u2714\ufe0f <strong>Take Immediate Custody and Control <\/strong>:<\/span> Ensure prompt control over assets and financial records of the Corporate Debtor (CD). Delays in taking control can lead to unauthorized payments toward pre-CIRP costs, violating the moratorium provisions.<\/p>\n<p><span style=\"color: #000080;\">\u2714\ufe0f <strong>Enforce Moratorium from Date of Admission : <\/strong><\/span>The moratorium applies from the date of the admission order by NCLT, not from the date the IP receives the order. IP must act swiftly to inform stakeholders and creditors about the moratorium to prevent unauthorized transactions.<\/p>\n<p><span style=\"color: #000080;\">\u2714\ufe0f <\/span><strong><span style=\"color: #000080;\">Engage with Suspended Board &amp; KMPs :<\/span> <\/strong>IPs must ensure full cooperation from the suspended Board of Directors and Key Managerial Personnel (KMPs) to continue operations and manage finances. Ensure proper handover of books, records, and management control.<\/p>\n<p><span style=\"color: #000080;\">\u2714\ufe0f <\/span><strong><span style=\"color: #000080;\">Ensure the Going Concern Status of the Corporate Debtor :<\/span> <\/strong>Continue essential operations without disruption. Prevent actions that may result in deterioration of the Corporate Debtor\u2019s value.<\/p>\n<p><span style=\"color: #000080;\">\u2714\ufe0f <strong>Monitor Transactions to Avoid Prejudicial Payments : <\/strong><\/span>Ensure no payments are made towards pre-CIRP liabilities unless explicitly permitted. Prevent any diversion of funds or unauthorized transactions.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"%E2%9D%8C_Donts_Actions_to_Avoid\"><\/span><span style=\"color: #000080;\"><strong>\u274c Don\u2019ts (Actions to Avoid)<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Do Not Delay in Assuming Control : Any delay in taking control increases the risk of unauthorized transactions, payments, or asset depletion by the suspended Board of Directors.<\/li>\n<li>IP Do Not Allow Any Legal or Recovery Proceedings Against the Corporate Debtor : Once the moratorium is in effect, no judicial proceedings, enforcement actions, or asset transfers can be undertaken against the Corporate Debtor.<\/li>\n<li>Do Not Ignore Non-Cooperation by the Suspended Board or KMPs : If the suspended management refuses to cooperate, immediately report the matter to NCLT and seek appropriate directions.<\/li>\n<li>IP Do Not Approve Payments in Violation of the Moratorium: Payments to creditors for pre-CIRP debts or settlements made during the moratorium are strictly prohibited unless permitted by law.<\/li>\n<li>Do Not Terminate Essential Services : Services critical for business continuity, such as electricity, water, and telecom, cannot be discontinued.<\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>Conclusion<\/strong><\/span><\/p>\n<p>The moratorium period serves as a protective shield for the corporate debtor during CIRP. Insolvency professionals must strictly comply with the IBC framework, swiftly assume control, and prevent any transactions that could undermine the resolution process.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Moratorium under Insolvency and Bankruptcy Code (IBC), 2016 The moratorium is a key feature of IBC, ensuring the Corporate Debtor\u2019s assets remain protected during CIRP, thereby maximizing resolution opportunities. It balances creditors&#8217; rights with the debtor\u2019s need for restructuring, preventing disruptive enforcement actions. The moratorium is a temporary suspension of legal proceedings and enforcement actions &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1148],"tags":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/8695"}],"collection":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/comments?post=8695"}],"version-history":[{"count":3,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/8695\/revisions"}],"predecessor-version":[{"id":9680,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/8695\/revisions\/9680"}],"wp:attachment":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/media?parent=8695"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/categories?post=8695"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/tags?post=8695"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}