Two assumptions cause trouble: that a promoter can always buy back the company once it enters CIRP, and that a promoter never can. Both are wrong. IBC Section 29A does not bar promoters as a class. It bars any person who falls into one of its ten grounds, and the ground that catches most promoters is an old NPA. A promoter who clears that NPA before submitting a plan, or whose company is an MSME, may still bid.
This article sets out what the section says, how the Supreme Court has read it, the cure that the Code allows, and the routes open to a promoter who is barred. It is written for the promoter of a distressed company India lenders have already taken to the NCLT, and for the advisers who sit beside them. Whether the aim is a bid, a withdrawal or IBC debt restructuring on negotiated terms, eligibility under the section comes first, and it is tested early in corporate insolvency India 2026 practice.
What IBC Section 29A does
IBC Section 29A, in the Insolvency and Bankruptcy Code, 2016, lists the persons who cannot submit a resolution plan. It was inserted with retrospective effect from 23 November 2017 and re-enacted by the Amendment Act of 2018. Its aim is to stop a person who contributed to a company’s default from regaining control at a discount through the process meant to resolve it. The Supreme Court upheld the section against a challenge under Article 14 in Swiss Ribbons Pvt. Ltd. v. Union of India (2019).
The test applies to the resolution applicant and also reaches anyone acting jointly or in concert with the applicant, and its connected persons. A resolution applicant must file an affidavit with the plan that it is eligible under Section 29A (Section 30(1)). A false affidavit puts the whole plan at risk.
The ten grounds in one table
| Clause | Who is ineligible |
| (a) | An undischarged insolvent |
| (b) | A wilful defaulter under RBI guidelines |
| (c) | A person with an NPA account, or who manages, controls or promotes a company whose account is an NPA, where a year or more has passed from the NPA date to the start of the CIRP, unless the dues are cleared (see below) |
| (d) | A person convicted of an offence carrying two years or more under a Twelfth Schedule Act, or seven years or more under any other law (the bar ends two years after release) |
| (e) | A person disqualified as a director under the Companies Act, 2013 |
| (f) | A person barred by SEBI from trading in securities |
| (g) | A promoter or manager of a company in which the NCLT has found a preferential, undervalued, extortionate or fraudulent transaction |
| (h) | A person who gave a guarantee for a company, where the creditor’s insolvency application was admitted, the guarantee was invoked and it remains unpaid in whole or part |
| (i) | A person under a similar disability under foreign law |
| (j) | A person with a connected person who is ineligible under (a) to (i) |
Check the exact wording against the bare Act before relying on any clause. For a promoter, the clauses that matter most are (c), (g), (h) and (j).
Clause (c): the NPA ground and how to cure it
Clause (c) of IBC Section 29A is where most promoters stand or fall. A promoter is caught if an account of the company under its management or control, or one it promotes, was classified as an NPA under RBI or other regulator guidelines at least one year before the CIRP began. For how a loan reaches that point, see Hectogon’s explainer on SMA classification and NPA timelines.
The clause has a cure. A person is eligible if it pays all overdue amounts with interest and the charges relating to the NPA account before it submits the resolution plan. The Supreme Court in ArcelorMittal India Pvt. Ltd. v. Satish Kumar Gupta (4 October 2018) treated the payment as a condition of eligibility at the time of the plan, not something that can wait until the plan is approved. In that case the Court gave two applicants two further weeks to pay, using its powers under Article 142. Do not plan on a similar indulgence.
Three practical points follow:
- The amount is everything overdue, not a negotiated figure. The proviso refers to overdue amounts with interest and charges. A settlement that leaves a balance outstanding may not satisfy it. Whether a negotiated sum clears the NPA is a question for counsel, and the bank’s written statement of accounts should be obtained first.
- The test covers every NPA account the person manages, controls or promotes, not only the debtor in CIRP. A promoter with a second group company in NPA has a second problem.
- Timing matters. The payment must be made before the plan is submitted, so the funds need to be arranged well before the deadline set in the process.
Control and see-through: who else is caught
In ArcelorMittal the Supreme Court read “control” in this context as positive or proactive control, not mere negative or reactive control, and “management” as de jure management, normally the board. It also held that the Code’s reference to persons acting jointly or in concert allows the court to look through a corporate bidder. Two bidders were found ineligible on this reasoning: one because a shareholder’s father was the promoter of an NPA company, and one because its holding company was a promoter of other NPA companies. Both were allowed time to clear the dues.
For a promoter, the lesson is plain. Bidding through a relative, a group company or a new vehicle does not avoid the clause if the bidder is connected to the promoter. Clause (j) and Explanation I define a connected person to include a promoter or person in management or control of the applicant, a person who will have control of the debtor’s business during the plan, and the holding company, subsidiary, associate or related party of either. The Code carves out a financial entity that is not a related party of the debtor from some of these clauses. A promoter is rarely in that position.
Clause (h): the personal guarantee trap
Promoters often guarantee the company’s loans. Under clause (h), a guarantee that the creditor has invoked and that remains unpaid in whole or part bars the guarantor from bidding, where the creditor’s own insolvency application against the debtor was admitted. Many promoters check clause (c) and miss this one.
The clause connects to personal exposure under Part III of the Code, which Hectogon’s article on personal guarantor insolvency covers. A promoter who wants to bid should find out early whether the bank has invoked the guarantee and what remains unpaid.
The MSME exception in Section 240A
Section 240A provides that clauses (c) and (h) of Section 29A do not apply to the CIRP of a micro, small or medium enterprise. In Hari Babu Thota (Supreme Court, 29 November 2023), the Court held that the promoter of a debtor that obtained its MSME registration after the CIRP began could still rely on Section 240A, and set aside the NCLT and NCLAT orders. SCC Online reports that the Court treated the date of submission of the plan as the cut-off for the exemption. Read the judgment before relying on that point.
Three limits apply. The exemption covers only clauses (c) and (h); the other eight grounds still apply. The enterprise must genuinely be an MSME under the Micro, Small and Medium Enterprises Development Act, 2006 on the thresholds in force. And the exemption does not help a promoter barred under, say, clause (b) as a wilful defaulter.
What a barred promoter can do
A barred promoter has four routes, and none is automatic.
- Cure and bid. For a clause (c) problem, clear the overdue amounts before the plan is submitted, as above.
- Settle and withdraw. The IBC Section 12A withdrawal route lets an admitted application be withdrawn if the committee of creditors IBC approves it by 90% of the voting share. An IBC 12A application is made by the creditor that filed the CIRP, through the resolution professional, so a promoter needs that creditor’s cooperation as well as the committee’s vote. A failed IBC CIRP withdrawal attempt can cost months, so the IBC 12A application should be prepared and the votes counted before it is filed. The Cyril Amarchand alert on the 2026 Amendment Act records that withdrawal needs 90% approval and is barred before the committee is constituted and after resolution plans are first invited, so the window has narrowed. A single creditor holding more than 10% can block it. This is the usual IBC CIRP withdrawal path for a promoter who has found funding. An IBC Section 12A withdrawal succeeds or fails on the committee’s arithmetic, so map each creditor’s voting share before approaching anyone.
- Settle before admission. The cheapest time to deal with an IBC settlement 2026 question is before the NCLT admits the application. Hectogon’s piece on what it means when your bank files against you at NCLT covers that stage. Any IBC settlement 2026 discussion should start from the lender’s written dues. Once the CIRP has begun, the moratorium and the committee’s control change the terms of every conversation.
- Contest the exclusion. If the resolution professional or the committee treats a promoter as ineligible and the promoter disagrees on the facts or the law, the dispute goes to the NCLT. An NCLAT IBC appeal under Section 61 lies against the NCLT’s order, and a further appeal to the Supreme Court under Section 62 lies on a question of law. Hari Babu Thota followed that path. Appeals add months, and the process continues in the meantime. A promoter weighing an NCLAT IBC appeal should budget for that delay.
None of these is a recommendation to any particular promoter. Which route fits depends on the debts, the lenders and the facts.
What the 2026 Act changed
I found no change to the text of Section 29A in the IBC (Amendment) Act, 2026. The Act matters for promoters in other ways. It requires a 14-day decision on a financial creditor’s application, tightens the withdrawal route as above, allows more than one plan to be considered, and creates a creditor-initiated process (CIIRP) in which the resolution professional must certify Section 29A compliance. CIIRP depends on notifications, and the sources available when this article was prepared did not show it as operational. For anyone following corporate insolvency India 2026, the practical effect is that promoters have less room to wait. Early advice matters more than it did.
Where lenders and promoters are exploring IBC debt restructuring outside the Code, remember that an admitted CIRP is governed by the Code and the NCLT, and a restructuring signed after admission can breach the moratorium.
Common mistakes
- Treating the title’s rule as absolute. Many promoters are eligible. Check each clause first.
- Bidding through a family member or new company. The connected-person and see-through provisions are drafted for this.
- Paying after the plan is submitted. The cure must precede submission.
- Overlooking an invoked guarantee under clause (h).
- Assuming the MSME exemption applies without checking the classification, the date and the other eight grounds.
- Ignoring the arithmetic of the vote. In any committee of creditors IBC decision on a plan or a withdrawal, a few large lenders usually decide the result.
- Signing the eligibility affidavit without review.
Frequently asked questions
What is IBC Section 29A?
Section 29A of the IBC lists the persons who cannot submit a resolution plan in a CIRP. It covers undischarged insolvents, wilful defaulters, promoters of companies with NPA accounts of a year or more, certain convicted persons, and others, and it extends to connected persons and persons acting in concert. It was inserted with effect from 23 November 2017.
Can a promoter bid for their own company in CIRP?
Sometimes. A promoter is barred only if one of the grounds applies, most often an NPA of a year or more, an invoked unpaid guarantee, or a connected person who is ineligible. A promoter can become eligible by paying all overdue amounts with interest and charges before submitting the plan, and promoters of MSMEs are exempt from two grounds under Section 240A.
How does a promoter cure the NPA ground under Section 29A(c)?
By paying all overdue amounts with interest and the charges relating to the NPA account before submitting the resolution plan. The Supreme Court in ArcelorMittal India v. Satish Kumar Gupta (2018) treated this as a condition at the time of the plan. Whether a negotiated sum is enough should be confirmed with counsel and the lender’s written statement.
Does Section 29A apply to MSME promoters?
Only partly. Section 240A says clauses (c) and (h) of Section 29A do not apply to the CIRP of an MSME. The other grounds, such as wilful default, convictions and disqualification as a director, still apply. The Supreme Court in Hari Babu Thota (2023) allowed a promoter to rely on the exemption although the MSME registration came after the CIRP began.
Can a promoter withdraw from CIRP instead of bidding?
Yes, through Section 12A, if the committee of creditors approves by 90% of the voting share. The 2026 Amendment Act, as summarised by law firms, narrows the window, so a single creditor above 10% can block it and timing matters. Withdrawal and bidding are separate routes with different tests.
