Supplier Claims and Continued Supply When a Customer Enters CIRP

A supplier whose customer enters Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 must file its claim as an operational creditor in Form B under regulation 7 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, ordinarily within fourteen days of the interim resolution professional's appointment. A late claim can still be filed up to ninety days from the insolvency commencement date, but not after the resolution plan is approved. Goods supplied after the admission order rank differently from pre-admission dues, since qualifying post-admission supply is paid as a resolution process cost ahead of secured lenders. This post covers claims timelines and continued-supply rules.

How a Supplier Finds Out, and the Two Dates That Matter

Trade creditors are rarely told directly. On admitting an application the Adjudicating Authority declares a moratorium under section 14 and causes a public announcement under section 13. Section 15 fixes the contents of that announcement, including the details of the interim resolution professional and the last date for claims. Regulation 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (the CIRP Regulations) requires publication in Form A within three days of the interim resolution professional's appointment, in one English and one regional language newspaper with wide circulation at the registered and principal offices of the corporate debtor and anywhere else it carries on material business operations, on the corporate debtor's own website, and on the website designated by the Insolvency and Bankruptcy Board of India.

A copy must also go to the creditors appearing in the corporate debtor's records, which helps but cannot be relied on: vendor masters go stale, and a supplier billing through several entity codes is often recorded under only one. A monthly check of the Board's website against the credit team's watch list of material customers is the only dependable early warning. Two dates then govern everything else. The insolvency commencement date is, under section 5(12), the date of admission, and every claim is valued as at that date. The last date for claims is fixed by regulation 6 at fourteen days from the interim resolution professional's appointment.

The internal freeze on day one

Freeze and reconcile the customer ledger as at the insolvency commencement date, so that interest, damages and escalation are computed to that date and no further. Pause dispatches until someone decides commercially whether to continue. Send a records hold to sales, logistics and accounts so that purchase orders, delivery challans, goods receipt notes, e-way bills and correspondence survive the retention policy. Stop recovery action of every kind: section 14(1)(a) bars the institution or continuation of proceedings against the corporate debtor, and a demand notice issued in ignorance achieves nothing.

Form B, Not Form C: Filing the Claim Correctly the First Time

Each category of creditor has its own form, and the allocation matters because it decides how the claim is collated and, for financial creditors, whether there is a seat on the committee. An operational creditor other than a workman or employee files Form B under regulation 7. A financial creditor files Form C under regulation 8. A financial creditor in a class files Form CA under regulation 8A and is represented by an authorised representative drawn from the three insolvency professionals named in the announcement, the machinery for which sits in section 21(6A) and regulation 16A. Workmen and employees file Form D, a representative acting for a body of workmen files Form E, and creditors fitting none of these categories file Form F.

A business that has only sold goods or services on credit is an operational creditor and files Form B. The position is less obvious where the relationship has more than one leg: a vendor that has also placed a security deposit, discounted its receivables or advanced working capital may hold operational and financial debt at once, and each limb belongs in its own form rather than in a single merged figure. The authorised representative route is closed to trade suppliers, and no operational creditor acquires a vote by appointing one. Section 24(3)(c) gives a narrower right, namely notice of every committee meeting where aggregate operational dues are not less than ten per cent of the debt, with attendance but no vote. Regulation 16E, inserted by the Fourth Amendment to the CIRP Regulations notified on 8 June 2026, adds that where creditors other than scheduled banks and public financial institutions hold more than sixty-six per cent of the voting share, the five largest unrelated operational creditors must be invited to committee meetings as observers, with their observations recorded in the minutes.

Proof that survives verification

Regulation 7(3) allows an operational debt to be proved from records available with an information utility or from other relevant documents, including the supply contract, invoices demanding payment, an order of a court or tribunal adjudicating the non-payment, and financial accounts. What a resolution professional actually looks for is an unbroken chain: purchase order, tax invoice, signed delivery challan or goods receipt note, running statement of account, and a ledger extract as at the insolvency commencement date. Reconciliation against GST returns is increasingly requested. A record authenticated by the corporate debtor with an information utility is the strongest single document a supplier can hold, because it is the debtor's own confirmation of the debt. Regulation 10 lets the resolution professional call for further evidence, and such requests deserve an answer in days rather than weeks.

How Long Does a Creditor Have to File a Claim in CIRP?

Regulation 12(1), substituted with effect from 18 September 2023, requires a creditor to submit its claim with proof on or before the last date stated in the public announcement. A creditor who misses that date may still file up to the date of issue of the request for resolution plans under regulation 36B, or ninety days from the insolvency commencement date, whichever is later, and must give reasons for any delay beyond ninety days. The older position, which allowed late claims until the committee approved a plan, was withdrawn deliberately, because no resolution professional can certify a list of liabilities that keeps moving.

Filing inside the window is routine verification. Filing after it is persuasion: the resolution professional weighs the explanation offered, the stage the process has reached and the disruption that admitting the claim would cause, and a refusal is challengeable rather than final. The later the claim, the thinner the prospects.

Once the plan is approved, the claim is gone

In RPS Infrastructure Ltd. v. Mukul Kumar [(2023) 10 SCC 718] the Supreme Court declined to disturb the rejection of a claim founded on an arbitral award and filed roughly 287 days after the last date, by which time the committee of creditors had already approved the resolution plan. The delay was fatal although the award itself was not in question. The principle behind that outcome was settled in Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. [(2021) 9 SCC 657], where the Court held that on approval of a plan under section 31 all dues owed to creditors, including statutory dues, that do not form part of the plan stand extinguished, so that the successful resolution applicant takes the company free of surprise claims. Section 31(6), inserted by the Insolvency and Bankruptcy Code (Amendment) Act, 2026 and in force since 26 May 2026, now says so in terms. A claim not filed before approval is not a claim that ranks last; it is not a claim at all.

Verification, the List of Creditors and Challenging a Rejection

Regulation 13 requires every claim to be verified as at the insolvency commencement date within seven days from the last date for receipt of claims, and a list of creditors to be maintained showing the amount claimed, the amount admitted and any security interest. That list is displayed on the corporate debtor's website, filed on the Board's electronic platform, filed with the Adjudicating Authority and placed before the committee at its first meeting. It repays reading, because it is where a creditor discovers that a claim of one crore has been admitted at forty lakh, usually because invoices are disputed, interest lacks a contractual foundation, or delivery evidence is missing.

Where a claim is imprecise because of a contingency, regulation 14 requires a best estimate on the information available, revised as better information emerges. A partial admission should first be met with a written request for reasons and an opportunity to supply the missing document, which disposes of a fair proportion of reductions without litigation. Failing that, the remedy is an application to the Adjudicating Authority under section 60(5), which covers any question of law or fact arising out of the insolvency of the corporate debtor, with an appeal to the National Company Law Appellate Tribunal under section 61 within thirty days, extendable by fifteen on sufficient cause. The sequence below assumes a fourteen day claim date and a process running broadly to the model timeline in regulation 40A.

Where Trade Debt Sits in the Waterfall

Section 53 fixes the order of distribution in liquidation and, through section 30(2)(b), the floor for what a resolution plan must pay. Process and liquidation costs rank first and are paid in full. Then come workmen's dues for the twenty four months preceding liquidation commencement, ranking pari passu with the debts of secured creditors who relinquish security. Then twelve months of wages and dues of other employees. Then financial debts owed to unsecured creditors. Then government dues for two years, together with any secured debt left unpaid after enforcement. Only then does the waterfall reach clause (f), which catches any remaining debts and dues. That is where ordinary trade debt sits, ahead of nothing but preference and equity shareholders.

Section 30(2)(b) entitles operational creditors to no less than they would receive under section 53 in a liquidation, or under a section 53 distribution of the amount payable under the plan, whichever is higher. Because clause (f) is reached only after everything above it has been satisfied, that floor is often small and sometimes nil. Counsel briefing a board should say so at the start rather than at the end. The 2026 Amendment improves matters at the margin, since the explanation to section 3(31) confirms that a security interest arises only where created by agreement and not by operation of law, and the explanation to section 53 confirms that a secured creditor is secured only to the extent of the value of its security. Neither disturbs the basic point that a pre-admission receivable is a poor asset.

Why Do Post-Admission Supply Dues Rank Ahead of Pre-Admission Debt?

Section 14(2) prevents the supply of essential goods or services as may be specified from being terminated, suspended or interrupted during the moratorium. Regulation 32 defines essential narrowly: electricity, water, telecommunication services and information technology services, and only to the extent they are not a direct input to the output the corporate debtor produces or supplies. Water for drinking and sanitation is essential; water fed into a hydroelectric plant is not. Most trade suppliers fall outside section 14(2) altogether.

Section 14(2A) is the provision that catches them. Where the interim resolution professional or resolution professional considers a supply critical to protect and preserve the value of the corporate debtor and to manage its operations as a going concern, that supply may not be terminated, suspended or interrupted during the moratorium, except where the corporate debtor has not paid dues arising from the supply during the moratorium period or in such circumstances as may be specified. Both limbs favour an alert supplier. The duty arises from the resolution professional's determination, so a supplier holding nothing in writing is not yet bound by it. The exception is self-executing: if payment for post-admission deliveries stops, the obligation to keep supplying stops with it.

Nothing in the Code obliges a supplier to extend credit to a company in insolvency. The moratorium suspends recovery of the old debt; it does not require the supplier to finance the resolution process out of its own working capital. Moving post-admission supply to advance payment, a letter of credit, a shorter cycle or a deposit is a legitimate commercial response and resolution professionals expect it. Conditioning further supply on payment of the pre-admission arrears is a different matter, because it seeks recovery of a pre-commencement claim outside the collective process, and where the supply has been designated critical it invites an application before the Adjudicating Authority.

What Should Be Settled Before the Next Consignment Ships?

Amounts due to suppliers of essential goods and services under regulation 32 are insolvency resolution process costs by force of section 5(13)(e) read with regulation 31(a). Other costs directly relating to the process fall within regulation 31(e) if the committee approves them, and that is the route by which post-admission supply outside regulation 32 is recognised. Regulation 31B, as revised by the Fourth Amendment of 8 June 2026, requires the resolution professional to place all costs incurred, with reasons, before the committee for approval at its first meeting, to obtain approval for anticipated costs at every later meeting, and to report actual costs against earlier estimates. After that first meeting no process cost may be incurred without committee approval.

Process costs are paid first under section 53(1)(a), and a plan must provide for them in priority under section 30(2)(a). The same supplier therefore holds two claims of entirely different quality against the same customer. The invoice raised the day before admission sits at clause (f) and will probably recover a fraction of its face value. The invoice raised the day after admission, for supply the resolution professional treats as critical and the committee approves as a process cost, sits at clause (a) and is paid in full, ahead of the banks. Four things convert that difference from hope into entitlement: written confirmation of the section 14(2A) determination, written confirmation of the committee's cost approval, separate invoicing and ledger tracking for post-admission supply, and immediate written escalation of any non-payment.

Frequently Asked Questions

Does a supplier have to keep supplying a customer that has entered CIRP?

Only if what you supply is essential within regulation 32, or the resolution professional has determined under section 14(2A) that it is critical to preserving value and running the business as a going concern. Absent either, there is no statutory duty to continue. Even where the supply is critical, the protection falls away if the corporate debtor does not pay for deliveries made during the moratorium.

Can advance payment or security be demanded for deliveries made after admission?

Yes. The Code does not require a supplier to extend credit to a company in insolvency, so renegotiating post-admission terms to advance payment, a letter of credit or a deposit is legitimate. What you cannot safely do is make continued supply conditional on settlement of the pre-admission arrears, because that amounts to recovering a pre-commencement claim outside the collective process.

What happens to a claim filed after the fourteen day date?

Under the proviso to regulation 12(1) you may still file up to the issue of the request for resolution plans under regulation 36B or ninety days from the insolvency commencement date, whichever is later, with reasons for delay beyond ninety days. Later than that, acceptance is a matter for the resolution professional and ultimately the Adjudicating Authority, and once a plan is approved the claim is extinguished.

The claim has been admitted at a reduced figure. What is the remedy?

Ask the resolution professional in writing for the basis of the reduction and offer the missing document; many reductions are corrected at that stage. If the position stands, apply to the Adjudicating Authority under section 60(5), and appeal to the National Company Law Appellate Tribunal under section 61 within thirty days if that application fails.

Can amounts owed to the customer be set off against its unpaid invoices?

Generally not. In
Bharti Airtel Ltd. v. Vijaykumar V. Iyer [2024 INSC 15] the Supreme Court held that insolvency and statutory set-off do not apply to a corporate insolvency resolution process, leaving only narrow exceptions for set-off expressly agreed before commencement and for claims so closely connected that denying set-off would be inequitable. Disclose mutual dealings in Form B rather than adjusting the account unilaterally.

What is the insolvency commencement date and why does it matter for a supplier's claim?

The insolvency commencement date is fixed under section 5(12) of the Insolvency and Bankruptcy Code, 2016 as the date the Adjudicating Authority admits the application against the corporate debtor. Every claim a supplier files is valued strictly as at that date, so interest, damages and any price escalation must be computed up to the insolvency commencement date and no further. The date also starts the countdown for the fourteen day claims window under regulation 6 and the ninety day outer limit under regulation 12(1), which makes it the single most important reference point in the entire claims process.

Can an operational creditor supplier attend or vote at meetings of the committee of creditors?

An operational creditor supplier does not sit on the committee of creditors and has no vote there, a position that filing through an authorised representative under regulation 8A cannot change since that route is reserved for financial creditors in a class. Section 24(3)(c) instead gives notice of every committee meeting where aggregate operational dues equal at least ten percent of total debt, with attendance but no vote. Regulation 16E, added by the Fourth Amendment notified on 8 June 2026, further entitles the five largest unrelated operational creditors to attend committee meetings as observers whenever non-institutional creditors hold more than sixty-six percent of the voting share.

What documents does a resolution professional expect to see to verify an operational creditor's claim?

A resolution professional verifying an operational creditor's claim under regulation 7(3) looks for an unbroken evidentiary chain: the purchase order, the tax invoice demanding payment, a signed delivery challan or goods receipt note, a running statement of account, and a ledger extract drawn as at the insolvency commencement date. Reconciliation against GST returns is increasingly requested as a cross-check. A record authenticated by the corporate debtor with an information utility is the strongest single document available, since it amounts to the debtor's own confirmation of the debt, and any regulation 10 request for further evidence should be answered within days rather than weeks.

Where does an unpaid supplier's pre-admission debt rank in the liquidation waterfall under section 53?

Ordinary trade debt owed to an unpaid supplier falls within section 53(1)(f), the residual category reached only after insolvency resolution process costs, workmen's dues for the preceding twenty four months, secured creditors who relinquish security, employee wages, financial debts owed to unsecured creditors, and two years of government dues have all been paid. Section 30(2)(b) guarantees an operational creditor no less than it would receive under this section 53 waterfall in a liquidation, but because clause (f) sits at the very bottom, that statutory floor is often modest and can be nil, a point worth flagging to a board or credit committee at the outset.

What supplies count as essential and cannot be cut off during the moratorium under section 14(2)?

Regulation 32 of the CIRP Regulations defines essential supplies narrowly for the purpose of section 14(2): electricity, water, telecommunication services and information technology services, and only to the extent these are not a direct input to what the corporate debtor itself produces or supplies. Drinking water and sanitation supply qualify; water fed into a production process generally does not. Most ordinary trade suppliers of goods fall outside this narrow category altogether and instead depend on the broader, discretionary protection available under section 14(2A) for supplies the resolution professional considers critical to preserving the business as a going concern.

How can a supplier ensure post-admission deliveries are treated as a resolution process cost rather than an ordinary claim?

Four things convert post-admission supply into a resolution process cost paid ahead of secured lenders under section 53(1)(a): written confirmation that the resolution professional has determined the supply critical under section 14(2A), written confirmation that the committee of creditors has approved it as a cost under regulation 31(e), separate invoicing and ledger tracking that keeps post-admission dues apart from the pre-admission claim, and immediate written escalation the moment any post-admission invoice goes unpaid. Regulation 31B requires the resolution professional to place these costs before the committee for approval, which makes a documented approval trail essential rather than optional.

Can a supplier's claim include interest and damages for delayed payment?

Interest and damages can be included only where they rest on a genuine contractual foundation, since resolution professionals routinely reduce or reject amounts claimed without one. Whatever is claimed must also be computed strictly up to the insolvency commencement date under section 5(12), because the moratorium under section 14 freezes recovery action and nothing further accrues against the corporate debtor after that point in the ordinary claim. A supplier should freeze and reconcile its ledger to that date at the outset, and keep the contractual basis for any interest clause readily available for the resolution professional to review.

What happens if the interim resolution professional's public announcement never reaches the supplier directly?

A supplier that never separately received the public announcement is not excused from the fourteen day deadline, because Form A is published in newspapers and on the corporate debtor's and the Board's websites rather than served individually on every creditor, and vendor master records held by the corporate debtor are frequently outdated or incomplete. The only dependable safeguard is for the credit team to check the Insolvency and Bankruptcy Board of India's website monthly against its own watch list of material customers, rather than relying on the corporate debtor to identify and notify the supplier directly.

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 proceedings before the National Company Law Tribunal (NCLT), Mumbai Bench, and advises Indian and international clients on commercial contracts, supply and vendor arrangements, and contractual enforcement before the Bombay High Court.

Related reading: Treatment of Disputed Operational Creditor Claims at the Admission Stage under IBC.

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.