NCLT Resolution Funding
NCLT resolution funding is structured credit an acquirer raises to implement a resolution plan under the Insolvency and Bankruptcy Code — paying the plan consideration and restarting the target's operations.
Credit Core Finance appraises and structures these files for transactions between ₹25 Cr and ₹500 Cr, pan-India, and places them through a leading private bank's structured desk. Lenders decide; CCF builds the file they can read.
What Resolution Funding Actually Pays For
An acquiring file must show where the fresh money goes and how the revived business pays it back. In a resolution transaction, the capital raised funds specific components of the transaction and the restart.
Settlement Under the Approved Plan
The primary use is the settlement amount agreed under the approved plan. This satisfies the existing claims as determined by the process, allowing the business to transition to new ownership.
Restart Working Capital
Beyond the settlement amount, the facility provides the liquidity required to bring the unit back to full operation. This covers initial working capital needs: purchasing raw materials, restoring power utilities, paying staff, and securing supplier contracts.
Repairs and Production Readiness
It also funds immediate repairs or maintenance needed to bring machinery back to production standards.
Future Earning Capacity
The credit evaluation focuses on the future earning capacity of the asset under new management. Past operational stress or previous balance sheet defaults belong to the former entity. The file stands on projected cash flows and the quality of collateral offered by the acquiring group.
Why Operating Assets End Up in NCLT
Running businesses usually enter insolvency through structural financial stress rather than operational failure. A common path involves heavy debt taken on for an expansion cycle, followed by an unexpected drop in market demand.
In other cases, large receivables get locked in prolonged commercial disputes, or a cost overrun on a capital project exhausts available liquidity before operations can generate positive cash flow. While the underlying unit remains productive, the balance sheet can no longer service its debt obligations.
Existing Operational Infrastructure
Establishing a new industrial facility requires significant lead time for land acquisition, building construction, utility connections, environmental clearances, and workforce recruitment. An existing facility already holds these assets in place.
Acquiring an Operating Setup
These same assets present clear operational advantages to strategic and financial acquirers. The process allows an acquirer to take control of an established operating setup, with the plant and workforce already in place and the customer base intact.
The process allows an acquirer to take control of an established operating setup, with the plant and workforce already in place and the customer base intact, while historical liabilities are settled under the terms of the approved plan. The incoming management starts with those claims resolved, positioned to run the business on its operational merit.
Three Kinds of Money in an Insolvency Transaction
Three different facilities get called NCLT funding, and they answer to different rules.
Interim Finance
Interim finance is debt the resolution professional raises to keep the company running during the insolvency process. The Code treats it as an insolvency-resolution-process cost, paid in priority under a resolution plan.
Plan-Implementation Funding
Plan-implementation funding is the money a successful resolution applicant brings in to pay the amounts committed under the approved plan: the consideration to creditors and the capital the plan itself promises.
Acquirer-Side Structured Debt
Acquirer-side structured debt is credit raised by the acquiring promoter or company against its own cash flow and collateral, to fund the acquisition and the restart.
Where CCF works: CCF works the third lane, with support into the second. The distinction decides how a file is read: interim finance turns on the creditors' committee, while an acquisition facility stands or falls on the acquirer's own balance sheet. Most pages on this subject blur the three; a lender never does.
Who Qualifies — Eligibility Band + Stress Gate
The file is tested on the acquirer, not the target. Screening benchmarks for this desk: ticket size ₹25 Cr to ₹500 Cr, fund-based and non-fund-based limits under one structure; debt service coverage above 1.0x on the post-acquisition cash flow; around 2x collateral cover from the acquiring group; and a promoter track record the desk can verify.
Stress History Is Reviewed Case-to-Case
Stress history on the acquirer's side is workable within limits. Past SMA-1, SMA-2 or a regularised NPA can be structured case-to-case.
An active NPA is never funded as-is — the path is regularise first, then structure. Suit-filed and wilful-default files stay out of scope.
The Code runs on the same logic. Section 29A bars a resolution applicant whose own account has stood classified as an NPA for a year or more, unless every overdue amount is cleared before the plan is submitted.
A promoter who regularises before bidding is exactly the file this desk can read; one who will not is barred by the statute before any lender sees the proposal.
How CCF Works the File
Screen the Acquiring Group
CCF screens the acquiring group first: bureau record, existing leverage and cash flow against the proposed debt.
Build the Information Memorandum
The Information Memorandum covers the target's revival economics and the security package so the proposed transaction can be assessed as a complete structure.
Run Coverage Under Stress
Coverage numbers are tested under stress before the proposal moves, giving the lender a clear view of the post-acquisition debt service position.
Placement runs through a leading private bank's structured desk as part of CCF's structured funding practice.
CCF does not promise approval, eligibility or timelines. Lenders decide; the work is making the decision easy to take.
What This Desk Does Not Fund
Land purchase and construction finance sit outside this desk entirely. The one construction lane is builder last-mile funding, where the project is above 70% complete.
Frequently Asked Questions
Can a promoter buy back his own company through NCLT?
Only by clearing the eligibility test in Section 29A of the Code, and that test reaches connected persons, so routing the bid through a related company does not escape it. Where the disqualification comes from an NPA account, clearing every overdue amount before the plan is submitted can restore eligibility.
Does NPA history disqualify a bidder?
Not by itself. The bar applies where the bidder's account has stood classified as an NPA for at least a year, measured up to the commencement of the target's insolvency process. It lifts if all overdue amounts, interest and charges are paid before the resolution plan is submitted.
Do the old company's dues follow the new owner?
Claims that arose before plan approval and are not part of the approved plan stand extinguished, and the Supreme Court has held that this expressly covers government and statutory dues. Liabilities the business creates after approval are the new owner's in the ordinary course.
Can finance be raised while the target is still in the insolvency process?
Yes. The Code recognises interim finance raised by the resolution professional and treats it as a process cost. That is different from an acquisition loan to a bidder: no lender is obliged to fund a bid, and a bidder's facility is tested on the bidder's own file.
Can only ARCs or financial institutions acquire a company through NCLT?
No. Any person who clears the Section 29A test can submit a resolution plan. Financial entities have specific carve-outs within that test; they do not hold an exclusive right to bid.
Does the moratorium protect promoters and personal guarantors?
No. The moratorium stays actions against the company in the process. A surety under a guarantee to the company sits expressly outside it, and lenders can proceed against personal guarantors while the process runs.
Does paying the overdues cure a wilful-defaulter tag?
No. Wilful default is a separate head of ineligibility under the Code, and the payment cure is written only into the NPA head. Wilful-default files are out of scope for this desk as well.