What does IRP (Insolvency Resolution Process) mean?

An IRP (Insolvency Resolution Process) is a legal process used to resolve a company's insolvency (financial distress). It's initiated under the Insolvency and Bankruptcy Code (IBC),2016 in India and is overseen by the National Company Law Tribunal (NCLT). The process usually involves a professional insolvency professional (IP) taking over the management of the distressed company, developing a plan to revive it, and then implementing that plan. The goal of IRP is to maximize the value of the company for the benefit of all stakeholders, including creditors, employees, and shareholders.

The IP may try to sell the company as a going concern or liquidate its assets to pay off creditors.
Creditors can vote on the resolution plan proposed by the IP, and if a majority of them approve it, the plan is implemented.
If the resolution plan fails, the company may be liquidated, and its assets will be distributed among creditors according to a predetermined hierarchy.
IRP is intended to be a faster and more efficient alternative to the previous bankruptcy laws in India, which were often lengthy and expensive.