What does IRP (Insolvency resolution process) mean?

IRP, which stands for Insolvency Resolution Process, is a critical procedure outlined in the Insolvency and Bankruptcy Code, 2016, the bankruptcy law governing India. This process comes into play when a corporate debtor defaults on repayments to its creditors. Financial creditors are then empowered to initiate the insolvency resolution process by submitting an application to the National Company Law Tribunal (NCLT).

Upon the NCLT’s admission of the application, the claims of the creditors, essentially the company’s assets, are frozen for a period of six months. During this period, the NCLT evaluates options for revival, determining whether debt resolution, corporate restructuring, or liquidation is the most suitable course of action. This multifaceted process unfolds through various stages.

For stocks in the IRP stage 1 and beyond, trading is restricted to the first day of the trading week—specifically, Mondays (or Tuesdays if Monday is a trading holiday). These stocks are visible in Cubeplus holdings exclusively on the first trading day of the week but can be viewed on Console throughout the trading week.

It’s important to note that an additional surveillance mechanism (WEB) is applied by the exchanges to such stocks. A list of stocks under the Insolvency Resolution Process is available on the (DOC). Notably, intraday trading and BTST (Buy Today, Sell Tomorrow) transactions are not permitted, and a 100% margin is applicable.