CIRP Cannot Be Sustained If Default Is Cured Before Admission Of Section 9 Application: NCLAT New Delhi

The NCLAT (National Company Law Appellate Tribunal) New Delhi has ruled that a "CIRP cannot be sustained if default is cured before admission of a Section 9 application." Section 9 of the IBC allows an operational creditor to initiate CIRP for a default. The tribunal clarified that if the corporate debtor remedies the default (e.g., makes the payment) before the Adjudicating Authority formally admits the Section 9 application, then the application becomes infructuous, and the CIRP cannot proceed. This encourages corporate debtors to settle dues before insolvency proceedings are formally initiated.