How to file a Section 7 application before the NCLT

A Section 7 application is how a financial creditor — typically a bank, NBFC or lender — triggers the corporate insolvency resolution process (CIRP) against a defaulting company. Here's what it takes and how the process unfolds before the NCLT.

When can a financial creditor file?

Under Section 7 of the IBC, a financial creditor can apply when a financial debt is owed and the company has defaulted. The default must be at least the prescribed threshold — currently ₹1 crore. A financial debt is money borrowed against payment of interest (loans, debentures, etc.), as opposed to an operational debt for goods or services.

What you need to file

• Proof of default — the strongest being a record from an information utility (such as NeSL), supported by loan documents, statements of account and demand notices;
• The application in Form 1 as prescribed under the rules;
• The name of a proposed Interim Resolution Professional (IRP) the creditor wishes to be appointed.

The process before the NCLT

The application is filed before the National Company Law Tribunal. The Tribunal examines whether a default has occurred and whether the application is complete. If satisfied, it admits the application; if there are defects, it may give an opportunity to cure them before rejecting.

Why applications get delayed or rejected

Common pitfalls include incomplete proof of default, a debt that is genuinely disputed or not a "financial debt," limitation issues, or procedural defects in the form. A clean, well-documented application — with default proof tied to specific figures and dates — moves far faster.

Practical takeaway

Section 7 is a powerful, time-bound recovery tool — but its strength lies in the quality of the default evidence and the precision of the filing. Getting the groundwork right before filing avoids months of avoidable adjournments.