IBBI Directs RPs to Strengthen Section 29A Due Diligence and File Detailed Eligibility Notes Before CoC

Circular No. IBBI/CIRP/88/2025, Dated: 18.11.2025

1. Background

The Insolvency and Bankruptcy Code, 2016 (IBC) and the regulations framed thereunder impose several responsibilities on the Resolution Professional (RP) to ensure transparency, fairness, and efficient conduct of the Corporate Insolvency Resolution Process (CIRP).

A critical aspect of this responsibility is facilitating informed decision-making by the Committee of Creditors (CoC) and ensuring that Prospective Resolution Applicants (PRAs) meet all statutory eligibility requirements.

2. Section 29A – Ineligibility Criteria for Resolution Applicants

Section 29A of the IBC prescribes a detailed list of ineligibility conditions that bar certain persons from submitting a resolution plan for a corporate debtor undergoing CIRP.

These include restrictions relating to:

• Past defaults,
• Undischarged insolvency,
• Connection with non-performing assets,
• Criminal convictions,
• Fraudulent transactions, and other disqualifying factors.

Compliance with Section 29A is fundamental to maintaining credibility and integrity of the resolution process.

3. Importance of Section 29A Due Diligence

Robust due diligence on the eligibility of PRAs:

• Ensures that only fit and credible applicants participate,
• Prevents entities with conflicts of interest or tainted backgrounds from acquiring stressed assets,
• Minimises the possibility of post-approval litigation, and
• Protects the sanctity and outcome of the resolution plan approved by the CoC and the Adjudicating Authority.

4. IBBI’s Directive to Resolution Professionals

To reinforce compliance standards, the Insolvency and Bankruptcy Board of India (IBBI) has issued specific instructions to all RPs to:

4.1 Strengthen Section 29A Due Diligence

RPs must adopt a more comprehensive approach while evaluating the eligibility of PRAs, including:

• Verification of supporting documents,
• Independent checks wherever required,
• Ensuring completeness and correctness of declarations submitted by applicants.

4.2 Place a Detailed Note Before the CoC

When resolution plans are placed for evaluation, RPs must submit a detailed note to the CoC covering:

• Findings of the Section 29A eligibility assessment,
• Supporting analysis and documentation, and
• Any concerns requiring CoC attention.

4.3 Record CoC Deliberations in Minutes

RPs are required to ensure that:

• The CoC’s discussions, observations, and decisions relating to Section 29A eligibility are clearly and accurately recorded in the minutes,
• Such records reflect the CoC’s informed reasoning and provide transparency for future reference or judicial scrutiny.

5. Significance

This directive is expected to:

• Enhance transparency and procedural rigour within CIRP,
• Reduce disputes over the eligibility of resolution applicants,
• Safeguard the interests of creditors, and
• Strengthen confidence in the insolvency resolution ecosystem.

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