What is Section 29A of the IBC?

Section 29A of the Insolvency and Bankruptcy Code is the eligibility gate for resolution applicants — a list of disqualifications (undischarged insolvents, wilful defaulters, promoters of long-standing NPA accounts, persons convicted of serious offences, and anyone connected to them) designed to prevent defaulting promoters from buying back their own companies at a discount.

Can a promoter bid for their own company under IBC?

Generally no, if they trip Section 29A — most commonly the NPA clause. Two lawful routes exist: where the corporate debtor is a registered MSME, Section 240A exempts the NPA and invoked-guarantee clauses; and a promoter may clear all overdue amounts before submitting a plan under clause (c).

Does Section 29A apply to liquidation sales?

Yes. A person ineligible to submit a resolution plan under Section 29A is also barred from purchasing the company's property in a liquidation sale under section 35(1)(f) of the Code.

Section 29A: who cannot bid for a company in insolvency.

Q: Who is a connected person under Section 29A?

Broadly, promoters and persons in management or control of the resolution applicant, its holding, subsidiary and associate companies, related parties, and persons who would manage the corporate debtor under the plan — eligibility is tested across this whole web, not the bidding entity alone.

Every resolution plan passes one gate before its price matters: is this bidder eligible at all? Section 29A is the negative list — tested across everyone behind the bid, not just the entity that signs it.

The ten disqualifications The acquisition playbook →

General information, not legal advice · report an error

Three positions a bidder can be in

ClearNo one connected to you falls in any of the ten. Affirmed on a 29A affidavit with the plan.

CurableThe NPA test (c) falls away if all overdue amounts are cleared before the plan is submitted.

BarredNo cure route, or caught through the connected-person net (j).

The ten disqualifications

(a)Undischarged insolventPersonally insolvent and not discharged.

(b)Wilful defaulterUnder RBI guidelines.

(c)The NPA testControls an account NPA for a year or more — cured if overdues are cleared before the plan.

(d)ConvictedOffence with 2+ years’ imprisonment under the specified statutes, within the look-back period.

(e)Disqualified as a directorUnder the Companies Act.

(f)Barred by SEBIFrom the securities markets.

(g)Tainted transactionsPromoter or manager of a company with a PUFE order against it.

(h)A guarantor who did not payGave a guarantee that was invoked and remains unpaid.

(i)The same, abroadAny of the above under a foreign law.

(j)The connected-person netConnected to anyone above — promoters, group companies, related parties, future managers.

Test everyone, not just the bidding entity. One ineligible party — a consortium member, the holding company, a future manager — disqualifies the whole plan.

The MSME carve-out (section 240A)

Where the debtor is a registered MSME, section 240A switches off the two harshest clauses — so an MSME’s own promoter can bid to keep the company, if nothing else applies. In the sub-₹100 Cr market that is often the only bidder.

Switched off for MSMEs

Still apply

(a)(b)(d)(e)(f)(g)(i)(j)

Test eligibility before you diligence the asset

1Map the webConsortium, group companies, related parties, future managers.

2Run all ten clausesAcross every one of them, not just the SPV.

3Cure before you bidClause (c) is cured only before submission.

4Then diligence the assetNever spend on a target you cannot bid for.

The gate outlives the CIRP: a barred person cannot buy the company’s property in a liquidation sale either (section 35(1)(f)).

Common questions

Can a promoter ever buy back their own company?

Two lawful routes exist. The MSME carve-out above, where the debtor is a registered MSME and no other clause applies; and clearing the overdue amounts that made the account an NPA, before submitting the plan, under clause (c). Outside those, a defaulting promoter bidding through connected persons is precisely what the section is written to stop.

Does 29A apply in liquidation sales too?

Yes — the ineligibility travels. A person barred from submitting a resolution plan is also barred from buying the company’s property in a liquidation sale under section 35(1)(f), so the gate cannot be waited out.

Who checks eligibility?

The resolution professional examines each plan and the accompanying 29A affidavit; the Committee of Creditors and ultimately the adjudicating authority rule on it, and competing bidders frequently litigate it.

What counts as a “connected person”?

Broadly: promoters and persons in management of the bidder, its holding, subsidiary and associate companies, related parties, and persons who will manage the debtor if the plan succeeds. The statutory definition is detailed — treat this as the shape, not the boundary, and take advice on the specifics.

I am a creditor. What should I be watching?

Whether an applicant is connected to the people who ran the company into insolvency, because that is the case 29A exists to catch, and because an eligibility challenge extends the process for everyone waiting to be paid. The orders in the case are where any such challenge becomes visible — every captured order →

Following a specific company?Its record shows the professional, the orders and, once concluded, the approved applicant.

Check a borrower →

General information, not legal advice — the statutory text and current case law govern, and nothing here is an opinion on anyone’s eligibility. Glossary · Acquisition Playbook →