A moratorium under Section 14 of the IBC is a statutory freeze declared by the NCLT on the date it admits a corporate insolvency application. It bars filing or continuing suits and proceedings against the company, executing decrees or awards, transferring its assets, and enforcing security. It lasts until the NCLT approves a resolution plan or orders liquidation.
How the moratorium works in India
From the admission date, the board is suspended and an interim resolution professional manages the company. A public announcement invites claims. Operational creditors file their claim in Form B with the invoices and proof of delivery. The resolution professional verifies claims and builds the list of creditors. The process has a time limit of 180 days, extendable once by 90 days, and should be completed within 330 days including litigation time under Section 12.
Goods or services supplied to the company after admission, at the request of the resolution professional, are generally paid as insolvency resolution process costs, which rank ahead of old claims. Dues from before admission become a claim in the process.
Why it matters for getting paid
A moratorium can stall a civil recovery suit, an MSME Samadhaan reference or the execution of a decree overnight, and the old claim may be paid only partly under a resolution plan. That is why speed matters: suppliers who recover before another creditor's application is admitted are paid in full; those who wait often are not. It also means that once a moratorium is in place, the right step is to file a claim in time, not to send more notices to the company.
How FundRaksha uses it
FundRaksha's advocates check for pending insolvency before every notice, then move fast while recovery is still possible: notice within 24 hours, and a settlement push where the buyer looks stressed. If a moratorium is already in force, the advocate files the Form B claim, tracks verification and advises on continuing supply as process costs. See also buyer company shut down, or book a free consultation.
Worked example (hypothetical)
A Ludhiana yarn supplier has a summary suit pending for ₹45,00,000 against a textile company. On 10 June, the NCLT admits a bank's application against that company and declares a moratorium. The suit is stayed. The supplier files a Form B claim for ₹45,00,000 with the resolution professional. The resolution professional asks the supplier to keep supplying yarn worth ₹5,00,000 a month to keep the mill running. Over three months the supplier delivers ₹15,00,000 and is paid in full as process costs, while the old ₹45,00,000 waits for the resolution plan.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.