How Section 33(1A) Allows One CIRP Restoration Before Liquidation

Section 33(1A) of the Insolvency and Bankruptcy Code, 2016, inserted by the 2026 Amendment and in force since 26 May 2026, lets the committee of creditors restore a corporate insolvency resolution process for up to one hundred and twenty days after the process period has expired or a plan has been rejected, provided the liquidation order under section 33(1) has not yet been passed. Restoration is available only once, since sub-section (1B) rules out a second attempt if the restored period also fails. This article explains how the two triggers for restoration differ and what creditors, resolution applicants, and counterparties should do when an application is filed.

The Window That Opens Just Before the Liquidation Order

Section 33(1) is written in the imperative. Where the Adjudicating Authority does not receive a resolution plan under section 30(6) within the process period, or rejects a plan under section 31 for non-compliance, it shall order liquidation, issue a public announcement, appoint a liquidator and declare a liquidation moratorium. A bench had no statutory room to hold the process open while creditors regrouped. Section 33(1A) opens with a non obstante clause and displaces that outcome, but only in the interval before the liquidation order is signed.

Timing is the whole of it. The Explanation to the sub-section says in terms that it applies to processes commenced before 26 May 2026 where no liquidation order has yet been passed, and that it does not apply where the order has been passed. A committee sitting on a matter reserved for a liquidation order therefore has a live option; a committee whose corporate debtor is already in liquidation does not. Section 33(2A) narrows the interval further by requiring the Tribunal to pass a liquidation order within thirty days of receiving the relevant intimation or application, recording reasons in writing for any delay.

Two Triggers, Two Different Restorations

The sub-section treats the two grounds in section 33(1) differently. Where no plan reached the Tribunal in time, the process is restored to be completed within such duration as the bench thinks fit, subject to a ceiling of one hundred and twenty days. Where a plan was rejected under section 31, restoration is expressly to the stage of invitation for submission of a resolution plan, again for a period the bench fixes and again capped at one hundred and twenty days. The distinction is practical rather than technical: a rejected plan means the field has to be reopened, whereas an expired clock may need only the existing process to finish.

Regulation 40F and What the Application Must Carry

Regulation 40F of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, inserted by the Third Amendment Regulations notified on 1 June 2026, supplies the procedure. The committee is to be given an opportunity to file before the liquidation order is passed, and the clarification to that regulation records that the resolution professional continues to discharge his responsibilities under the process until the application is decided. The application is filed by the resolution professional once the committee resolves to do so, and must carry a certified copy of the resolution approving restoration, a brief note setting out the reasons, and a proposed timeline for completing the restored process.

The proposed timeline is the element most likely to be underprepared and the one a bench will read first. A note that asks for the full one hundred and twenty days without saying what will happen in them is an invitation to refuse.

How the 120 Days Sit Against Section 12 and the 330-Day Outer Limit

Section 12 gives the process one hundred and eighty days, extendable once by up to ninety days on a resolution of the committee passed by sixty-six per cent of voting share, and the second proviso sets an outer limit of three hundred and thirty days from the insolvency commencement date, counting extensions and time taken in legal proceedings. In ArcelorMittal India Pvt. Ltd. v. Satish Kumar Gupta [(2019) 2 SCC 1] the Supreme Court read section 12 as mandatory in structure, treating two hundred and seventy days as the statutory maximum and holding that time spent litigating over a plan later upheld ought to be excluded. The 2019 amendment then folded litigation time into the outer limit, and the word "mandatorily" in that proviso was struck down as manifestly arbitrary in the Essar Steel litigation [(2020) 8 SCC 531].

Restoration is not an extension under section 12 and does not have to be squeezed inside those three hundred and thirty days. It operates at a point where the section 12 clock has already run out or a plan has already failed, and section 33(1A) confers a fresh period with its own separate cap. The better reading is that the one hundred and twenty days sit outside the section 12 timeline rather than inside it, since restoration is triggered by the very expiry that section 12 produces. The point is untested, and the application should ask the bench to fix the restored period expressly rather than leave it to be inferred.

Trigger, Actor, Deadline, Consequence

The sequence below tracks a process that has reached the point of failure.

Why Is Restoration Available Only Once?

Sub-section (1B) permits restoration once. The Explanation that follows removes any doubt about a second failure: where no plan is received within the restored period, or a plan received in that period is rejected under section 31(2), the Tribunal shall pass a liquidation order. Nothing survives at that point and there is no further application to make. A committee that spends its restoration on a thin revival attempt, a bidder who has not proved funding or an expression of interest from a party that never returns, has nothing left when the one hundred and twenty days expire.

That makes the decision closer to option pricing than to procedure. The committee cannot save the option for a better moment, because it lapses the instant the liquidation order is passed. What the committee does control is the quality of the case it takes into the restored period and the duration it asks for. Seeking one hundred and twenty days when a credible bidder needs sixty costs nothing; seeking one hundred and twenty days with no bidder identified spends the only second chance the corporate debtor will get.

What Is the Adjudicating Authority Likely to Weigh?

The sub-section says the Adjudicating Authority shall consider an application, and then that it may restore. Consideration is mandatory; restoration is not. K. Sashidhar v. Indian Overseas Bank [(2019) 12 SCC 150] holds that the commercial wisdom of the committee is not open to review and that the Tribunal cannot substitute its own commercial judgment for that of the creditors, which will do much of the work when a committee explains why it believes resolution remains achievable. The discretion conferred by section 33(1A) is nonetheless real, and the material a bench will test is what regulation 40F(3) requires to be filed: whether the reasons disclose something concrete rather than a hope, and whether the proposed timeline can actually be met.

Swiss Ribbons Pvt. Ltd. v. Union of India [(2019) 4 SCC 17], in upholding the constitutional validity of the Code, described a statute whose object is the revival of the corporate debtor with liquidation reserved as a last resort. Section 33(1A) is that objective converted into a procedural right, and an applicant committee should say so in terms. A bench choosing between a liquidation order and a bounded further period, on evidence that resolution is realistically available, now has an express statutory basis for the second.

Is Restoration the Same as Withdrawal Under Section 12A?

The two mechanisms answer different questions and are not alternatives. Withdrawal under section 12A ends the proceeding altogether, on the footing that the debt has been settled and the corporate debtor should go back to its own management. Restoration under section 33(1A) keeps the proceeding alive so that a resolution plan can still be found, with the board still suspended and the resolution professional still in control. Regulation 30A, as substituted on 1 June 2026, also bars a withdrawal application after the invitation for expression of interest has issued, a stage that any process which has run out of time will have passed long before.

What Creditors, Bidders and Counterparties Should Do When Restoration Is Sought

Restoration changes the position of everyone connected to the corporate debtor, and the interval in which to react is measured in days rather than weeks.

The Financial Creditor Deciding How to Vote

Model both outcomes before the vote rather than after it. The comparison is between the realistic recovery from a restored process, discounted for the risk that it fails as well, and the realistic recovery in liquidation under the section 53 waterfall, net of liquidation costs and the delay in realising assets. A secured creditor should run that comparison alongside its position outside the Code, and should note that the 2026 Amendment now deems security relinquished if the secured creditor does not inform the liquidator within fourteen days. Record the reasoning in the minutes; a vote later questioned is far easier to defend on a contemporaneous note.

The Resolution Applicant Waiting in the Wings

Restoration on the section 33(1)(b) ground reopens the invitation for resolution plans, which is the only realistic route back in for a bidder that missed the original process or was outbid. Watch the cause list rather than the market, because the window between the committee's resolution and the Tribunal's order is short and a bidder who surfaces after the restored period has begun will find the timetable already fixed. Funding evidence and section 29A eligibility need to be ready in advance; a restored process with a hard one hundred and twenty day ceiling has no room for diligence that should have been done earlier.

The Operational Counterparty Still Supplying

A supplier, lessor or service provider needs to know which of three states the corporate debtor is in: a live process, a restored process, or liquidation. During restoration the process continues, so the moratorium under section 14 continues, and supplies made at the resolution professional's request to keep the company running remain capable of treatment as insolvency resolution process costs where the committee approves them. That treatment stops on a liquidation order. Before extending further credit, confirm in writing that the restoration application has been allowed and record the date the restored period expires.

Frequently Asked Questions

Who actually files the restoration application?

The resolution professional files it, acting on a decision of the committee of creditors passed by not less than sixty-six per cent of voting share. Regulation 40F requires the application to carry a certified copy of that resolution, a note giving the reasons for restoration, and a proposed timeline for the restored process.

Can restoration be sought after the liquidation order is passed?

No. The Explanation to section 33(1A) is explicit that the sub-section does not apply where a liquidation order has been passed. If your matter is reserved for orders, the application has to go in now, and the resolution professional continues to discharge his responsibilities until it is decided.

Does the 120 days come out of the 330-day limit in section 12?

The better view is that it does not. Restoration is triggered by expiry of the section 12 period or rejection of a plan, so treating the restored period as part of the same limit would leave the sub-section with almost nothing to operate on. The question has not yet been decided, so ask the bench to fix the restored period expressly in its order.

What happens if the restored process also fails?

Liquidation follows. The Explanation to section 33(1A) requires the Tribunal to pass a liquidation order under section 33(1) where no plan is received within the restored period, or where a plan received in that period is rejected. Sub-section (1B) rules out a second restoration.

Does restoration apply to processes that began before 26 May 2026?

Yes, provided no liquidation order has been passed. The Explanation extends sub-sections (1A) and (1B) to processes initiated under Chapter II before that date, which makes it worth reviewing any matter of yours that is currently awaiting a liquidation order.

Is restoration the same as asking for an extension of the process?

No. An extension under section 12 must be sought before the period expires, is capped at ninety days and can be granted only once. Restoration operates after the process has failed, is capped at one hundred and twenty days, is available only once, and depends on the Tribunal not having passed the liquidation order.

What is the difference between the two restoration triggers under section 33(1)?

Where no resolution plan reached the Adjudicating Authority within the process period, the process is restored to be completed within a period the bench fixes, capped at one hundred and twenty days. Where a plan was submitted but rejected under section 31 for non-compliance, restoration instead takes the process back to the stage of inviting fresh resolution plans, again for a period capped at one hundred and twenty days. The practical difference is that an expired clock may only need the existing process to finish, while a rejected plan means the field for resolution plans has to be reopened.

What percentage of the committee of creditors must approve a restoration application?

The committee of creditors must resolve to seek restoration by not less than sixty-six per cent of voting share, the same threshold that applies to a section 12 extension. The resolution professional then files the restoration application on the strength of that resolution, along with a certified copy of it, a note giving the reasons for restoration, and a proposed timeline for the restored process, as required by Regulation 40F of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

Does the moratorium under section 14 continue during a restored process?

Yes. Restoration keeps the corporate insolvency resolution process alive rather than ending it, so the moratorium under section 14 of the Insolvency and Bankruptcy Code, 2016 continues throughout the restored period in the same way it applied before the process expired or the plan was rejected. Supplies made at the resolution professional's request to keep the company running during this period remain capable of treatment as insolvency resolution process costs where the committee of creditors approves them, a treatment that stops the moment a liquidation order is eventually passed.

What happens to a secured creditor's security interest if it takes no action during this period?

The 2026 Amendment to the Insolvency and Bankruptcy Code, 2016 deems a secured creditor's security interest relinquished if that creditor does not inform the liquidator of its intention within fourteen days once the process moves to liquidation. This is a strong reason for a secured creditor to actively monitor a restoration application rather than remain passive, since the consequence of inaction attaches once liquidation follows, whether restoration was sought and failed or was never sought at all.

What must a resolution applicant have ready before the restored process begins?

A resolution applicant waiting to participate in a restored process should have its funding evidence and section 29A eligibility ready in advance, since the restored period, capped at one hundred and twenty days, leaves no room for diligence that should have been completed earlier. Where restoration reopens the invitation for resolution plans, this is often the only realistic route back in for a bidder who missed the original process or was outbid, but the compressed timetable rewards preparation made before the committee's resolution rather than after it.

What is the role of the resolution professional while the restoration application is pending?

The clarification to Regulation 40F records that the resolution professional continues to discharge his responsibilities under the corporate insolvency resolution process until the restoration application is decided by the Adjudicating Authority. This means the process does not fall into a vacuum while the application is pending. The resolution professional keeps functioning in that role, and the committee of creditors continues to operate, until the Tribunal either allows restoration or proceeds to pass a liquidation order.

Can restoration be sought after the 330-day outer limit under section 12 has already passed?

The better reading is that it can. Restoration under section 33(1A) is not an extension under section 12 and does not have to be accommodated within the three hundred and thirty day outer limit that provision sets, since restoration is triggered precisely by expiry of the section 12 period or rejection of a plan, meaning the 330-day limit has typically already run its course by the time restoration becomes relevant. Section 33(1A) confers a fresh, separately capped period of its own. This question has not yet been settled by a court, so an applicant should ask the bench to fix the restored period expressly in its order.

What does the non obstante clause in section 33(1A) actually do?

A non obstante clause, typically opening with words such as 'notwithstanding anything contained', overrides other provisions that would otherwise apply. In section 33(1A), it displaces the ordinarily mandatory outcome under section 33(1), which requires the Adjudicating Authority to order liquidation once the process period expires without a plan or a plan is rejected. The non obstante clause creates a narrow window in which the Tribunal can restore the process instead of proceeding straight to liquidation, but only in the interval before the liquidation order itself has actually been passed.

Vikrant D. Shetty | Vikrant D. Shetty leads the Insolvency and Arbitration Practice at the law firm Vikrant D. Shetty & Associates, Advocates & Solicitors, which advises financial creditors, operational creditors and corporate debtors in corporate insolvency resolution and liquidation proceedings before the National Company Law Tribunal (NCLT), Mumbai Bench, including applications concerning the timeline for completion of a resolution process, and represents parties in domestic and international commercial arbitrations seated in India and abroad, including enforcement and challenge proceedings before the Bombay High Court.

Related reading: IBC vs SARFAESI: Which Route Delivers Faster Asset Realisation.

This article is for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please seek direct consultation with an advocate.