How to Buy a Company Through IBC or NCLT Insolvency in India (2026)

Quick answer: You can buy an Indian company in insolvency by submitting a resolution plan to its creditors, by buying it (or its assets) in liquidation, or, for MSMEs, through a pre-packaged process. You must pass the Section 29A eligibility test, the creditors’ committee must approve your plan with at least 66% of the vote, and the NCLT must sign it off. Prices can be low (creditors have recovered about 30% of their claims on average), but the process takes close to two years and the company is usually in worse shape than its last accounts suggest.

The numbers first

Source: IBBI Quarterly Newsletter, April to June 2026.

Two things stand out for a small buyer. First, more than twice as many cases end in liquidation as in a rescue, so many smaller companies are bought out of liquidation, not through a resolution plan. Second, 612 of the 1,454 resolved cases with data (about 42%) were already defunct or had been sick companies (BIFR) before insolvency. A cheap price often buys a business that had stopped working long ago.

The four ways to buy a company in insolvency

Pre-packaged insolvency in brief: it’s for MSMEs only, needs a default of at least ₹10 lakh and approval from at least 66% (by value) of financial creditors who are not related parties, and must finish within 120 days. The company submits a base plan; if that plan doesn’t pay operational creditors in full, the resolution professional invites competing plans (a “Swiss challenge”). Only 18 have been admitted, so treat it as rare.

Step by step: buying through a resolution plan

1. Find the invitation. The resolution professional publishes an invitation for expressions of interest (Form G) in newspapers. It names the company, its business, the eligibility criteria and the last date. Our list of where to find businesses for sale covers where to look.
2. Check the eligibility criteria. Many invitations set a minimum net worth or turnover for bidders. Read these first: they knock out many small buyers before Section 29A does.
3. Submit the expression of interest with the documents asked for, including a Section 29A declaration.
4. Get the information memorandum and data room after signing a confidentiality undertaking.
5. Submit your resolution plan in reply to the request for resolution plans. Expect to post earnest money and, if you win, a performance security.
6. Creditors vote. The plan needs at least 66% of the creditors’ committee by voting share.
7. The NCLT approves the plan. Only then do you own the company and start paying out under it.

Who can’t bid: Section 29A in plain English

You (and anyone connected with you) are barred if you are, among other things:

• An undischarged insolvent, or a wilful defaulter under RBI guidelines
• Linked to an account classified as an NPA for a year or more, unless you clear the overdue amounts first
• Convicted of certain offences, or disqualified as a director
• Barred by SEBI from the securities market
• A promoter of a company that made preferential, undervalued or fraudulent transactions found in an insolvency process
• A guarantor for a creditor of this company, where the guarantee has been invoked and not paid

Little-known exemption for MSMEs: under Section 240A, the NPA and guarantor bars don’t apply to resolution applicants for an MSME. In Hari Babu Thota (Supreme Court, 29 November 2023), the Court confirmed that eligibility is tested on the date the plan is submitted. In practice, an MSME’s own promoter can sometimes bid to buy it back.

Section 29A also applies in liquidation: a person barred from submitting a plan can’t buy the company in a liquidation sale either.

What you get, and what you don’t

What you get

• A clean slate. Under Section 32A, once the NCLT approves a plan that changes control to an unconnected buyer, the company is not liable for offences committed before the insolvency process began.
• Old claims settled. The Supreme Court held in Ghanashyam Mishra (2021) that claims not included in the approved plan are extinguished, including government dues.
• A price set by what creditors would get in liquidation, not by the business’s history. Creditors have accepted about 30 paise per rupee of claims on average.

What you don’t get

• Speed. Plans have taken 633 days on average to be approved. Customers, staff and suppliers drift away in that time.
• Reliable numbers. The data room is put together by a resolution professional, not management, and the last audited accounts are often years old.
• A quiet life. Former promoters often challenge plans in court, which adds months.
• Guaranteed licences and contracts. Check every licence, lease and key contract, and whether it survives a change of control.

What changed in 2026

The IBC (Amendment) Act 2026 received assent in 2026, and the government brought major parts of it into force from 26 May 2026. Changes that matter to buyers include:

• A resolution plan can now expressly be a sale of one or more assets, or a merger or demerger, which helps buyers who want only part of a business.
• Competition approval is obtained before the plan goes to the NCLT, not after.
• Before ordering liquidation, the NCLT can restart the process once, if creditors agree, with a 120-day limit.
• Liquidation must finish within 180 days, extendable by 90, with a one-year outer limit.
• A new creditor-initiated process lets financial creditors start a faster, 150-day resolution while management stays in place.

Check which of these are in force for your case: not every section was notified on 26 May.

Is it worth it for a small buyer?

This guide is general information, not legal advice. Use an insolvency lawyer and the resolution professional’s documents for any bid.