Chapter II - Corporate Insolvency Resolution Process
Section 20
Section 20: managing the debtor as a going concern
The interim resolution professional must try to preserve the corporate debtor's property and keep its business operating during the opening stage of CIRP. Section 20 supplies concrete powers to support that duty, subject to a secured-creditor safeguard for interim finance.
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Need advice on Section 20?
This article is for general information. Refer to the Insolvency and Bankruptcy Code, 2016 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(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—
(a) to appoint accountants, legal or other professionals as may be necessary;
(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;
(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.
(d) to issue instructions to personnel of the corporate debtor as may be necessary for keeping the corporate debtor as a going concern; and
(e) to take all such actions as are necessary to keep the corporate debtor as a going concern.
Introduction
The 2026 IBC Amendment Act does not change Section 20. It concerns the interim professional's operational mandate, read with the management transfer under Section 17, moratorium under Section 14 and later resolution-professional duties under Section 25. The broad power in clause (e) is tied to the going-concern objective; it is not a substitute for other statutory approvals.
Key takeaways
Preserve value and operations
Subsection (1) directs the interim professional to make every endeavour to protect property value and manage the debtor as a going concern.
Operational tools
The professional can appoint necessary advisers, manage contracts, issue personnel instructions and take actions needed to keep operations running.
Finance with a secured-property condition
Interim finance may be raised, but creating new security over encumbered property normally needs the existing secured creditors' prior consent, subject to the stated value exception.
Map what must keep running
Identify essential contracts, staff, systems and assets required for ordinary operations. Record why an action protects the debtor's value or preserves its going-concern status.
Use professional and contract powers
The interim professional may appoint necessary accountants, lawyers and other professionals, and enter, amend or modify contracts on the debtor's behalf. Document necessity and applicable process approvals.
Check security before interim finance
If interim finance would create a security interest over already encumbered property, identify whose debt is secured there and test the prior-consent rule and the statutory twice-the-debt exception before granting security.
Practical checklist
Do
- Maintain an operational continuity plan and reasons for major decisions.
- Document professional appointments and contract changes.
- Check encumbrances, values and secured-creditor consent before granting security for interim finance.
Avoid
- Do not treat a broad going-concern power as authority to ignore another Code restriction.
- Do not assume every interim financing security can be created without secured-creditor consent.
Glossary
- Going concern
- A business that continues operating, rather than merely holding assets for disposal.
- Interim finance
- Finance raised for the corporate debtor during the insolvency process under the Code.
- Encumbered property
- Property already subject to a security interest or other encumbrance.
Frequently asked questions
Can the interim professional change a pre-CIRP contract?
Section 20(2)(b) grants authority to enter, amend or modify contracts or earlier transactions for the Section 20(1) purpose, subject to other applicable law and process requirements.
Is existing lender consent always needed for interim finance?
Consent is required before creating new security over encumbered property, unless the property's value is at least twice the secured debt under the proviso. The facts and valuation must be checked.
Need help applying this provision to your situation?
Contact BizeneedLast updated 9 October 2026