Section 29A explained: who cannot submit a resolution plan

Section 29A of the Insolvency and Bankruptcy Code is one of its most consequential provisions — it decides who is allowed to submit a resolution plan for a company in insolvency. Get it wrong and an otherwise strong plan can be thrown out. Here's a plain-language guide.

Why Section 29A exists

When the IBC was introduced, a clear risk emerged: the very promoters whose mismanagement drove a company into insolvency could simply buy it back cheaply through the resolution process — wiping out debt and keeping control. Section 29A was inserted to stop exactly that, by making certain persons ineligible to be resolution applicants.

Who is disqualified?

Among others, a person is ineligible if they (or any person acting jointly or in concert with them):

• Are an undischarged insolvent;
• Are a wilful defaulter;
• Have an account classified as a non-performing asset (NPA) for a year or more, without first clearing the overdue amount;
• Are a disqualified director;
• Have been convicted of certain offences, or are prohibited from trading in securities; or
• Have executed an enforceable guarantee in favour of a creditor of the corporate debtor under insolvency.

The reach of "connected persons"

Crucially, the bar does not stop at the applicant. It extends to connected persons — those who will manage or control the company after the plan, and their relatives and associates. This wide net is deliberate, to prevent disqualified promoters from returning through a proxy.

Practical takeaway

For resolution applicants, Section 29A diligence should be done before bidding, covering the applicant and every connected person — and pegged to the submission date. For RPs and the CoC, re-testing eligibility at the right date protects the plan from being challenged after approval.