Section 29A keeps those who caused the default, and others unfit to run the company, out of the resolution — and it reaches connected persons. AMLEGALS advises applicants, resolution professionals and creditors on eligibility, cure and the ArcelorMittal line of authority.
Section 29A changed the economics of resolution. Before it, a defaulting promoter could watch the value of the company fall, then buy it back cheaply through the very process meant to discipline the default. The provision closes that door by listing who cannot submit a resolution plan — the wilful defaulter, the person whose account has been a non-performing asset for a year, the convicted, the disqualified director, the person whose guarantee has been invoked — and by extending each bar to persons acting in concert and to connected persons.
The practical contest is about two things: reach and cure. Reach, because the committee of creditors and the tribunal must trace control through relatives, holding and subsidiary entities and related parties to decide whether an applicant is truly independent of an ineligible promoter. Cure, because the Supreme Court in ArcelorMittal confirmed that a curable disqualification can be purged before submission. AMLEGALS advises on screening, structuring, the eligibility affidavit and the defence or challenge of a plan on Section 29A grounds.
Screening a prospective resolution applicant and persons acting in concert against each limb of Section 29A before submission.
Mapping promoters, control, and holding, subsidiary, associate and related parties to assess the reach of the disqualification.
Advising on curing a curable ineligibility — such as clearing NPA overdues — within the statutory window, in line with ArcelorMittal.
Assessing the Section 240A relaxation of the wilful-defaulter and NPA bars for MSME corporate debtors.
Defending or challenging the eligibility of a resolution applicant before the committee of creditors and the tribunal.
Preparing the Section 29A eligibility affidavit and disclosures and advising the resolution professional on verification.
Section 29A of the Insolvency and Bankruptcy Code lists the persons who are not eligible to submit a resolution plan for a corporate debtor. It was introduced to prevent those who contributed to the default, or who are otherwise unfit, from regaining control of the company at a discount through the resolution process. The provision screens a resolution applicant and persons acting jointly or in concert with it against a set of disqualifying conditions.
The grounds include an undischarged insolvent; a wilful defaulter; a person whose account is classified as a non-performing asset for one year or more without clearing the overdue amount before submission; a person convicted of an offence punishable with two or more years of imprisonment; a disqualified director; a person prohibited from trading in securities by SEBI; a person who has executed a guarantee in favour of a creditor in respect of the corporate debtor and the guarantee has been invoked and remains unpaid; and persons connected to any of the above. Each limb has its own tests and cure provisions.
Yes. Section 29A disqualifies not only the resolution applicant but also any person acting jointly or in concert with it, and connected persons as defined — including promoters, those in management or control, and holding, subsidiary, associate or related parties. The reach to connected persons is deliberately wide to stop an ineligible promoter from routing a plan through a relative or a controlled entity. The scope of connection is frequently litigated.
In ArcelorMittal India Private Limited v Satish Kumar Gupta (2019), the Supreme Court held that eligibility under Section 29A is tested at the time of submission of the resolution plan and that a person may cure a disqualification, such as an NPA classification, by paying the overdue amounts before submission. The Court read the provision purposively, confirming its wide reach to those in control while allowing a genuine applicant to purge a curable ineligibility within the statutory window.
Section 240A relaxes Section 29A for the resolution of micro, small and medium enterprises. Specifically, the bars relating to being a wilful defaulter and to an NPA classification do not apply to a resolution applicant for an MSME corporate debtor, recognising that in smaller enterprises the promoter is often the only realistic bidder. The other disqualifications under Section 29A continue to apply, so eligibility must still be assessed carefully for each MSME plan.
No. No engagement is treated as accepted until conflicts, scope and terms are confirmed in writing.
Share your role and the facts bearing on eligibility — defaults, classifications, group structure — for a confidential preliminary assessment.