Section 29A of the IBC

Section 29A of the Insolvency and Bankruptcy Code, 2016 bars specified persons from submitting a plan to resolve a corporate debtor's insolvency. Ineligibility covers the applicant and persons acting jointly or in concert with the applicant, and also extends through specified connected persons, subject to statutory exceptions.

Financial-status disqualifications

• An undischarged insolvent is ineligible.
• A wilful defaulter, classified under Reserve Bank of India guidelines, is ineligible.
• A person with a non-performing asset account, including that of a corporate debtor under their management or control or of which they are a promoter, is generally ineligible if at least one year has elapsed from classification to commencement of the debtor's insolvency resolution process. Eligibility can be restored by paying all overdue amounts, interest and charges before submitting the plan; statutory exceptions include specified financial entities.

Legal and conduct-related disqualifications

• A person convicted of an offence punishable with imprisonment of two years or more under a Twelfth Schedule law, or seven years or more under any law, is ineligible; this bar ceases two years after release from imprisonment.
• A person disqualified to act as a director under the Companies Act, 2013 is generally ineligible, subject to statutory exceptions.
• A person prohibited by SEBI from trading in securities or accessing securities markets is ineligible.
• A person who was a promoter, or managed or controlled a corporate debtor involving a preferential, undervalued, extortionate-credit or fraudulent transaction is ineligible where the Adjudicating Authority has made an order under the Code, subject to statutory exceptions.
• A guarantor is ineligible where the debtor's insolvency application has been admitted and the guarantee has been invoked but remains wholly or partly unpaid.

Foreign disabilities and connected persons

• Corresponding disqualifications under foreign law also attract ineligibility.
• Connected persons include promoters or controllers of the applicant, persons who will promote or control the debtor during implementation, and their specified holding, subsidiary, associate companies and related parties, subject to statutory exceptions.