Statutory Timelines and Practical Realities under the Insolvency and Bankruptcy Code, 2016

When the Insolvency and Bankruptcy Code (IBC) came into force in 2016, it carried one clear promise: speed. The law hard-wired strict timelines. A Corporate Insolvency Resolution Process (CIRP) was to be completed in 180 days, with one extension of 90 days. In 2019, this was capped at 330 days, including time spent in court. Liquidations were meant to finish within one-year, voluntary liquidations within 90–270 days, and “fast-track” CIRPs for smaller cases in just 90 days or a maximum of 135 days. 

On paper, the message was simple: act quickly, preserve value, and avoid long-drawn insolvencies. But in reality, things play out very differently at the National Company Law Tribunal (NCLT). Many resolution cases stretch to 700–850 days before a plan is approved. Liquidations often drag beyond a year. Even voluntary liquidations, which are supposed to be smooth, get stuck at the last step—waiting for the court to pass a dissolution order. 

The courts have acknowledged this gap. They have clarified that while the 330-day cap is not absolute, extra time should only be allowed in exceptional circumstances. At the same time, they warn that delays cannot become routine. 

For businesses, lenders, investors, and resolution applicants, these are not just statistics. Every delay means loss of value, reduced recoveries, and greater uncertainty. That is why understanding the gap between the law’s intent and its actual practice is crucial for anyone with a stake in the insolvency process. 

This blog is a part of our The Complete Guide to NCLT in India: Powers, Structure, and Jurisdiction Blogpost.

The Design Intent: What the IBC Timelines Promise 

1. 1. CIRP (Corporate Insolvency Resolution Process): When the IBC was enacted, the idea was to finish insolvency resolution in 180 days, with one possible extension of 90 days if the NCLT agreed. In 2019, the Parliament tightened this further by adding a hard cap of 330 days (this includes extensions and time lost in litigation). The message was clear, a company’s insolvency should be wrapped up in about a year so that its business value does not erode. 
   2. Liquidation: Under Regulation 44 of the IBBI (Liquidation Process) Regulations, liquidators are expected to finish liquidation within one year. If they try a compromise or arrangement under Section 230 of the Companies Act, it must be attempted within 90 days of the liquidation order. The law here uses the word “endeavour” so it’s not an automatic cut-off, but it strongly pushes liquidators to close matters quickly and avoid open-ended delays. 
   3. Voluntary liquidation: This is meant for companies that are solvent but want to wind up. The IBBI Voluntary Liquidation Process Regulations set a benchmark of 90 days (if there are no creditors) and 270 days (if creditors exist). If the process drags beyond 12 months, the liquidator must file yearly progress reports which is a provision provided as an added pressure to such companies to close fast. 
   4. Fast-track CIRP: For small companies and notified MSMEs, the Code offers a “lightweight” version: a 90-day process, with one extension of 45 days. The maximum is 135 days, ensuring that smaller cases do not get bogged down in endless litigation. 

The law was designed to make speed the central tool for preserving value and to protect businesses from losing worth, ensure creditors recover more, and reduce exhaustion for all stakeholders. 

The Execution Gap: What Really Happens at the NCLT 

1. 1. CIRP delays are the norm and not the exception: In practice, most CIRPs stretch far beyond the legal ceiling. On average, it takes 700–850 days for a resolution plan to be approved, which is more than double the 330-day limit. Only a small fraction of cases finishes in alignment with the statutory timelines. Big-ticket cases like Essar Steel1 took over two years, showing how systemic these delays are. 
   2. Liquidation is rarely completed within a year: Although the law expects liquidators to close in one year, most cases take 1.5 to 2 years. Even after the liquidator files the final report, the wait for a dissolution order can add several extra months, leaving an “administrative tail.”  
   3. Voluntary liquidation is not always “swift”: While meant to be smooth, voluntary liquidations often last 12–15 months. The main work may finish within a year, but getting the dissolution order can take another 6–9 months, dragging out the process.  
   4. Fast-track CIRP is under-used: The fast-track option (90–135 days) for small companies and MSMEs is rarely used. The reason: admission hurdles, creditor claim checks, committee formation, and objections eat into the already short window. Unless the resolution plan is ready upfront, parties hesitate to use it. 
   5. COVID backlogs: Pandemic-era suspensions and exclusions built up a backlog. More importantly, they created a culture of “timeline flexibility” that continues even now.  

The IBC may be designed for swift action, but in reality, it is slowed by limited capacity, heavy litigation, and procedural bottlenecks. The result: timing risk is now a built-in feature of the system. 

Friction Points: Why the Timelines Slip 

1. 1. Limited NCLT capacity: The NCLT benches are often understaffed and overburdened. As a result, even simple matters like admission, plan approval, liquidation, or dissolution take far longer than the law envisions. Routine applications also pile up, stretching every stage. 
   2. Admission delays: The insolvency clock starts only after admission. But pre-admission disputes, adjournments, or settlement talks can consume weeks or months, by which time the company may already lose customers, employees, or asset value. 
   3. Complex claims and creditor committees: With multiple classes of creditors (especially after homebuyers were added in real estate cases), verifying claims and electing representatives takes time. This pushes back the formation of the Committee of Creditors (CoC) and delays initial decision-making. 
   4. Prolonged bidding rounds: To maximize value, CoCs often run several rounds of bidding or invite revised plans. While commercially sensible, this eats into the statutory timeline and usually leads to requests for extensions or “exclusions.” 
   5. Litigation at every stage: From admission disputes to promoter ineligibility (Section 29A), from process fairness to distribution disputes, almost every step attracts litigation. Appeals to NCLAT and even the Supreme Court, coupled with interim stays, can easily push matters well past the 330-day ceiling. 
   6. Regulatory approvals: Clearances from regulators like the Competition Commission of India (CCI) or sectoral regulators often become critical bottlenecks. Despite efforts to secure these early, they remain unpredictable in timing. 
   7. The value erosion cycle: Delays weaken the business, inventory loses value, assets decay, goodwill fades. This reduces recovery for creditors, which in turn sparks more disputes and appeals, creating a vicious cycle of delay. 

How Have the Courts Interpreted these Timelines? 

1. 1. Essar Steel (2019): flexibility over rigidity: The Supreme Court held that the 330-day cap is not an absolute cut-off. If a resolution plan is close to approval, forcing liquidation just because the clock runs out would defeat the very purpose of the IBC. This gave rise to the idea of “exceptional circumstances,” where limited flexibility is allowed to protect value. 
   2. NCLAT (2024); flexibility with limits: The appellate tribunal has since permitted cases to go beyond 330 days where delays were justified, transparent, and supported by the Committee of Creditors (CoC). At the same time, it has warned against routine or casual extensions, reminding stakeholders that discipline must be maintained. 
   3. Appeals have stricter deadlines: Higher courts have taken a tougher stance on appeal timelines—typically 30 days plus a maximum extension of 15 days. This shows their reluctance to allow delay tactics disguised as process. 
   4. Regulatory clearances: Parliament and the courts have tried to speed up approvals from regulators like the Competition Commission of India (CCI) and sectoral bodies, while also adding bench strength to NCLTs. But many smaller, practical bottlenecks continue to derail timelines. 

Therefore, the Courts see IBC timelines as guardrails, not guillotines. Some flexibility is allowed to save value, but misuse of that flexibility invites strict correction. Ultimately, whether an extension is granted depends on credible evidence, clear timelines, and creditor consensus. 

Who Pays the Price for the Delay? 

1. 1. Creditors: For both financial and operational creditors, every extra month in the process means lower recovery. Long delays eat into value, reduce returns, and force banks to make bigger provisions while keeping capital tied up. For unsecured and operational creditors, prolonged liquidations often mean little to no recovery. Creditors must therefore push back against adjournments, demand regular progress reporting, and escalate to higher forums when delays become excessive. 
   2. Resolution applicants (RAs): For bidders, delays damage the viability of their plans. Business forecasts become outdated, financing commitments expire, and money tied up in deposits or guarantees loses value. Many applicants try to re-price or even walk away when timelines slip. The solution is to do thorough due diligence early, structure contracts with safeguards against delay, and secure regulatory approvals in parallel, while staying prepared to fight in court if needed. 
   3. Corporate debtors and promoters. Companies stuck in CIRP limbo see operations weaken. Vendors lose trust, customers drift away, and employees leave. This undermines the business value that the IBC is supposed to preserve. Promoters and management should therefore cooperate fully with the Resolution Professional (RP), avoid delaying tactics, and consider settlements or withdrawals early if they make commercial sense. 
   4. Employees: Delays ripple outward to the organisation, and employees face job insecurity due to the unforeseen circumstance. 

Conclusion:Practical Realities under the Insolvency and Bankruptcy Code

The IBC was designed with speed as its core strategy. But in practice, delays creep in through court schedules, procedural frictions, and endless litigation. Courts have tried to balance discipline with flexibility, making it clear that while timelines are not absolute guillotines, they cannot be treated casually either. 

In this system, success depends not just on “knowing the law,” but on managing time as a business risk. That means preparing evidence and documents upfront, running a professional and well-structured process, building early consensus among stakeholders, securing regulatory approvals in parallel, and litigating only with precision. 

For creditors, this requires aligning early, resisting adjournments, and pressing the pace. For bidders, it means presenting deal-ready plans and planning for approvals in advance. For debtors, cooperation and pragmatic exits often preserve more value than delaying tactics. 

At its heart, insolvency is a race against erosion of value. If the system cannot always move faster, stakeholders must. With strong governance, legal strategy, and disciplined execution, timeline risk can be managed and not suffered.