CHAPTER II CORPORATE INSOLVENCY RESOLUTION PROCESSCentral

Section 20 of The Insolvency and Bankruptcy Code, 2016.

(1)The interim resolution professional shall make every endeavour to protect and preserve the value of the property of the corporate debtor and manage the operations of the corporate debtor as a going concern.
(2)For the purposes of sub-section (1), the interim resolution professional shall have the authority—
1. (a)to appoint accountants, legal or other professionals as may be necessary;
2. (b)to enter into contracts on behalf of the corporate debtor or to amend or modify the contracts or transactions which were entered into before the commencement of corporate insolvency resolution process;
3. (c)to raise interim finance provided that no security interest shall be created over any encumbered property of the corporate debtor without the prior consent of the creditors whose debt is secured over such encumbered property: Provided that no prior consent of the creditor shall be required where the value of such property is not less than the amount equivalent to twice the amount of the debt.
4. (d)to issue instructions to personnel of the corporate debtor as may be necessary for keeping the corporate debtor as a going concern; and
5. (e)to take all such actions as are necessary to keep the corporate debtor as a going concern.

Summary

The interim resolution professional must protect and preserve the value of the company's property while keeping the business running as a going concern.
They have the authority to appoint accountants, legal experts, or other necessary professionals to help manage the operations.
They are authorised to enter into new contracts or amend and modify existing transactions on behalf of the company.
They can raise interim finance, which is emergency credit, to sustain the ongoing business operations.
Prior consent of secured creditors is required to create a security interest over pledged property, unless the property's value is at least double the loan amount.
They can issue binding instructions to the company's staff and take all necessary actions to ensure business continuity.

Practical examples

1On 5th November 2026, Mr. Anand Sen is appointed as the interim resolution professional of Sigma Pharma. The company has a critical contract with a chemical supplier signed in June 2026. Anand renegotiates the payment terms of this existing contract on 10th November 2026 to ensure a steady supply of raw materials and prevent the factory from shutting down.

2Ms. Kiran Bedi, the interim resolution professional of Delta Hospitality, needs ten lakh rupees on 20th November 2026 to pay the monthly electricity bills and salaries of hotel staff. Under Section 20, she raises this sum as interim finance. To secure this loan, she wants to pledge a company transport bus. Since the bus is already mortgaged to Bank of Baroda for a four-lakh-rupee loan, she does not need the bank's consent because the bus is valued at nine lakh rupees, which is more than double the four-lakh-rupee debt.

FAQ

1. What is the primary management duty under Section 20 of The Insolvency and Bankruptcy Code, 2016?

Under Section 20 of The Insolvency and Bankruptcy Code, 2016, the interim resolution professional must make every endeavour to protect and preserve the value of the property of the corporate debtor and manage its operations as a going concern.

2. Can an interim resolution professional hire professionals under Section 20 of the Insolvency and Bankruptcy Code, 2016?

Yes, under Section 20 of the Insolvency and Bankruptcy Code, 2016, the interim resolution professional has the authority to appoint accountants, legal, or other professionals as necessary.

3. When can interim finance be secured on encumbered property without creditor consent under Section 20 of the Insolvency and Bankruptcy Code, 2016?

Under Section 20 of the Insolvency and Bankruptcy Code, 2016, no prior consent of the creditor is required if the value of the encumbered property is not less than twice the amount of the secured debt.

4. Can the interim resolution professional modify pre-insolvency contracts under Section 20 of the Insolvency and Bankruptcy Code, 2016?

Yes, under Section 20 of the Insolvency and Bankruptcy Code, 2016, the interim resolution professional has the authority to enter into contracts or to amend or modify contracts entered into before the process began.

Test yourself

Q1.Under Section 20 of The Insolvency and Bankruptcy Code, 2016, what is the main objective of the interim resolution professional when managing the company?

Q2.Under Section 20 of The Insolvency and Bankruptcy Code, 2016, whose consent is needed to create a security interest over already-encumbered property for raising interim finance?

Q3.Under Section 20 of The Insolvency and Bankruptcy Code, 2016, which of the following powers does the interim resolution professional possess?

Q4.Under Section 20 of The Insolvency and Bankruptcy Code, 2016, how may pre-existing contracts of the corporate debtor be handled?

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