IBC Section 7: IREDA’s Insolvency Plea Against Gensol
Why in the news
The government-owned financier IREDA moved the National Company Law Tribunal (NCLT) against Gensol Engineering for defaulting on a ₹510 crore loan.
About Section 7 of the IBC
It sets out how a financial creditor, alone or jointly with others, can start the Corporate Insolvency Resolution Process (CIRP) before the NCLT (Adjudicating Authority).
Key provisions
| Element | Detail |
|---|---|
| Who files | Financial creditor, singly or with others, on a financial debt default |
| Application contents | Proof of default (information utility record or bank statements), name of proposed IRP, creditor details |
| Default threshold | Minimum ₹1 crore |
| NCLT’s role | Check that debt and default exist; admit or reject within 14 days |
| Grounds to reject | Debtor shows it is a viable going concern; CIRP not in all stakeholders’ interest; documents incomplete or threshold unmet |
Significance
- Gives lenders a structured route to recover dues and protects creditor rights.
- Promotes early, time-bound resolution rather than long defaults.
Exam angle
- Section 7: financial creditor; adjudicating authority: NCLT; time to decide: 14 days.
- IRP: Insolvency Resolution Professional.