Section 29A IBC in 2026: Who Is Ineligible to Submit a Resolution Plan?
Section 29A of the Insolvency and Bankruptcy Code, 2016 is the gatekeeping provision that decides who may submit a resolution plan. In practical terms, a bidder can have the funding and commercial appetite to acquire a stressed company and still be excluded if the bidder, a person acting jointly or in concert with it, or a connected person falls within the statutory disqualifications. For resolution professionals, the Committee of Creditors and prospective applicants, eligibility therefore needs to be tested before a plan is allowed to progress.
The compliance focus has become sharper. IBBI's circular dated 18 November 2025 requires resolution professionals to place a detailed Section 29A compliance note before the CoC when plans are considered and to ensure the CoC's deliberations and observations are properly recorded. The 2026 IBC amendment also carries Section 29A compliance into the new creditor-initiated insolvency resolution framework. This makes bidder diligence a process-control issue, not merely an affidavit exercise.
1. What does Section 29A do?
Section 29A says a person is not eligible to submit a resolution plan if that person, or another person acting jointly or in concert with that person, falls within any of the listed disqualifications. The test is deliberately wider than the name of the bidding entity: promoter relationships, management or control, guarantees, regulatory disabilities and connected persons can all matter.
2. Main Section 29A disqualifications — in plain English
The principal statutory categories include: an undischarged insolvent; an RBI-classified wilful defaulter; specified NPA-linked persons where the statutory conditions are met; persons with specified serious convictions; persons disqualified from acting as directors under the Companies Act; persons prohibited by SEBI from trading or accessing the securities market; persons connected with certain avoidance transactions ordered by the Adjudicating Authority; guarantors whose guarantees in respect of the corporate debtor have been invoked and remain unpaid in full or part; corresponding foreign-law disabilities; and persons with an ineligible connected person.
3. The NPA rule: when can an applicant cure the problem?
Clause (c) is one of the most commercially important parts of Section 29A. Broadly, it addresses an applicant that, at the time of submission of the plan, has an NPA account — or is linked through management, control or promoter status to a corporate debtor with such an account — where at least one year has elapsed from classification until commencement of the CIRP. The Code provides a cure: the person can become eligible by paying all overdue amounts with interest and charges relating to the NPA account before submitting the resolution plan. The clause also contains specific carve-outs, including for qualifying financial entities and certain NPAs acquired through an earlier approved resolution plan.
4. Why connected persons can disqualify an otherwise clean bidder
Section 29A is not confined to the bidder's own balance sheet. Its connected-person definition reaches the promoter or person in management or control of the resolution applicant; the person who will be promoter or in management or control of the corporate debtor during plan implementation; and, subject to statutory financial-entity carve-outs, specified holding, subsidiary, associate and related-party relationships. Bid structures should therefore be mapped beyond the special-purpose vehicle that signs the plan.
5. Promoters and guarantees: two common areas of misunderstanding
Being an existing promoter is not, by itself, a universal Section 29A disqualification. The relevant statutory clause must actually be triggered. Equally, the guarantee clause is more specific than simply having signed a guarantee: clause (h) addresses a guarantee in favour of a creditor in respect of a corporate debtor against which the creditor's insolvency application has been admitted, where the guarantee has been invoked and remains unpaid in full or part. Facts and timing matter.
6. MSME exception under Section 240A
For a qualifying micro, small or medium enterprise, Section 240A provides a targeted relaxation: clauses (c) and (h) of Section 29A do not apply to a resolution applicant in the CIRP or pre-packaged insolvency resolution process of that MSME. This is an exception to particular clauses, not a blanket waiver of the rest of Section 29A. Promoters of an MSME must still be tested against the remaining disqualifications.
7. What IBBI now expects from the Resolution Professional and CoC
IBBI Circular No. IBBI/CIRP/88/2025 restates the compliance chain. Form G must mention Section 29A ineligibility criteria. A prospective resolution applicant submits an undertaking with its expression of interest. The applicant submits an eligibility affidavit with its plan. The resolution professional must conduct due diligence rather than merely collect the affidavit. Form H requires confirmation regarding the affidavit and a due-diligence certificate. Most importantly, the RP must place a detailed Section 29A compliance note before the CoC, and the CoC's discussion should be captured in the minutes.
8. Practical Section 29A due-diligence checklist
For resolution applicants: map promoters, beneficial owners, management and control; identify persons acting jointly or in concert; review NPA histories and cure requirements; verify wilful-defaulter status; check Companies Act director disqualifications and SEBI restrictions; examine invoked guarantees; review past avoidance-transaction orders; map connected entities in India and overseas; document any financial-entity or MSME exception relied upon; and update the analysis if the ownership or consortium structure changes before plan submission.
For the RP and CoC: do not treat the applicant's affidavit as the end of the exercise. Maintain source documents, ownership/control charts, database checks and written legal analysis for material issues; place the detailed compliance note before the CoC; record questions, clarifications and conclusions in the minutes; and ensure the eligibility position remains supportable when the plan is submitted for approval.
9. Judicial principle: substance matters more than the bidding vehicle
The Supreme Court's landmark ArcelorMittal litigation remains central to understanding Section 29A. The provision was designed to prevent persons who are responsible for, or sufficiently connected with, specified disqualifying circumstances from regaining control through a resolution plan merely by structuring the bid through another entity. Eligibility analysis must therefore examine real management, control and connected-person relationships, not only the applicant's formal name.
10. What changed in 2026 — and what did not
The Insolvency and Bankruptcy Code (Amendment) Act, 2026 received Presidential assent on 6 April 2026 and introduced major process reforms. The Amendment Act did not replace the core Section 29A disqualification list. However, the new creditor-initiated insolvency provisions expressly require the resolution professional's report and resolution plan to comply with Sections 29A and 30, reinforcing that eligibility remains foundational across the evolving resolution architecture. The effective date of individual amendment provisions depends on notified commencement, so transaction teams should check the applicable notification for the proceeding in question.
11. Frequently asked questions
Can an existing promoter submit a resolution plan?
Possibly. Promoter status alone is not the complete test. The promoter and relevant connected persons must be examined against each applicable clause of Section 29A, subject to statutory exceptions such as Section 240A for qualifying MSMEs.
Can an NPA-linked applicant become eligible by paying dues?
Clause (c) contains a cure mechanism: all overdue amounts with interest and charges relating to the NPA account must be paid before submission of the resolution plan. Whether clause (c) is triggered in the first place requires a fact-specific analysis.
Does the MSME exemption remove every Section 29A restriction?
No. Section 240A(1) disapplies clauses (c) and (h) for resolution applicants in respect of qualifying MSMEs. Other Section 29A clauses continue to require examination.
Is a self-declaration by the applicant enough for the RP?
No. The CIRP Regulations require due diligence, and IBBI's 18 November 2025 circular specifically directs the RP to place a detailed Section 29A compliance note before the CoC and record the CoC's deliberations and observations.
12. Related PGT & Associates IBC analysis
13. Primary sources
How PGT & Associates can assist
Section 29A questions are often decided by ownership structures, control rights, financial history and transaction-specific facts. PGT & Associates can assist resolution applicants, creditors, promoters and corporate stakeholders with eligibility reviews, connected-person mapping, document diligence and coordinated IBC compliance. This article is for general information and does not constitute legal advice; the current statute, regulations, notifications and facts of the specific CIRP should be reviewed before acting.
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