IBC Section 6: Persons who may initiate corporate insolvency resolution process

Section 6 of Insolvency and Bankruptcy Code, 2016: Persons who may initiate corporate insolvency resolution process

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

Where any corporate debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself may initiate corporate insolvency resolution process in respect of such corporate debtor in the manner as provided under this Chapter.

Legal Commentary & Landmark Judgments: Section 6

Section 6 specifies the three exclusive statutory classes of persons entitled to initiate the Corporate Insolvency Resolution Process against a defaulting corporate debtor under Chapter II of Part II.

Financial Creditor Standing: Initiation by a financial creditor (or two or more financial creditors jointly) under Section 7.
Operational Creditor Standing: Initiation by an operational creditor following statutory demand notice under Section 9.
Corporate Applicant Standing: Voluntary initiation by the corporate debtor itself, or its partner, member, or authorized managerial representative under Section 10.
Exclusivity of Roster: No other third party (such as trade unions, minority shareholders, or government agencies) can directly initiate CIRP under Section 6.

Key Landmark Precedents:

Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: The Supreme Court affirmed the distinct statutory classification between financial and operational creditors under Section 6, holding that financial creditors are uniquely equipped to evaluate corporate viability in the Committee of Creditors.
Pioneer Urban Land and Infrastructure Ltd. v. Union of India (2019) 8 SCC 416: The Supreme Court confirmed that allottees of real estate projects are financial creditors within the meaning of Section 6 r/w Section 5(8)(f), entitled to initiate CIRP subject to numerical thresholds.

Courtroom Practice & Strategic Litigation Guidance:

In preliminary objections, examine whether the applicant qualifies strictly under Section 6. If an operational creditor attempts to dress up an equity investment or unliquidated damages claim as a debt under Section 6, move for summary dismissal.