Section 10 IBC — Application by Corporate Debtor

Section 10 of the Insolvency and Bankruptcy Code, 2016 provides the corporate debtor itself with the right to initiate the Corporate Insolvency Resolution Process (CIRP) by filing a voluntary application before the National Company Law Tribunal (NCLT). This provision recognises that the management of a company may be best placed to identify early signs of financial distress and seek resolution proactively, rather than waiting for creditors to act.

Self-Filing by the Corporate Debtor

Unlike Sections 7 and 9 where creditors initiate the process, Section 10 allows the corporate debtor to trigger CIRP on its own. The application must demonstrate that the corporate debtor has committed a default — meaning it has failed to pay a debt that has become due and payable. The minimum default threshold of ₹1 crore applies equally. The application is filed in Form 6 under the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

Board Resolution Requirement

For a company to file under Section 10, the application must be authorised by a resolution of the board of directors or, in the case of a company where the management is vested in partners, by a majority of the partners. The board resolution must specifically authorise a designated person to file the application on behalf of the corporate debtor. This ensures that the decision to enter insolvency is a considered corporate decision and not an act of individual directors.

Special Resolution of Shareholders

In cases where a special resolution is required under the company's articles of association or applicable law, the corporate debtor must also obtain the approval of its shareholders by special resolution (75% majority). While the IBC does not explicitly mandate a special resolution in all cases, prudent practice and certain NCLT orders have emphasised the importance of shareholder consent, particularly when the filing may affect minority shareholders' interests.

Documentation Required

The Form 6 application must be accompanied by the books of account and other financial records for the previous two years, the annual returns for the preceding two financial years, a statement of affairs as on the date of the application, details of the proposed Interim Resolution Professional with written consent and IBBI registration number, and any other information as prescribed. The NCLT examines whether the default is established and the application is complete before admission.

Strategic Use & Implications

Section 10 can be used strategically by a corporate debtor that anticipates financial distress and seeks an orderly resolution before creditors initiate hostile proceedings. Early filing may preserve greater value in the company and give the debtor's management a role in proposing resolution terms. However, Section 10 has also been subject to criticism for potential misuse — the 2018 amendment under Section 10(4) bars a corporate debtor from filing if it has already committed a default on any debt due to the operational creditors and has not paid the same, preventing abuse of the provision.