CIRP Costs and Insolvency Professional Fees
CIRP costs are paid before every other debt. Here is what they include and who decides the fee.
Insolvency resolution process costs, usually called CIRP costs, are the price of running the process itself: interim finance, the resolution professional's fee, the cost of keeping the business going, and expenses the Board specifies. They matter because they are paid first. A resolution plan must pay them in priority to every other debt, and in liquidation they sit at the top of the section 53 waterfall.
For an insolvency professional, costs are also a conduct question. Who fixed the fee, who approved each expense, and whether it was disclosed are all things IBBI inspects, and the exam's CIRP case studies regularly ask about them.
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What Counts as a CIRP Cost
Section 5(13) of the Code, expanded by regulation 31 of the CIRP Regulations.
- Under the Code, section 5(13)
- Interim finance and the cost of raising it; the fee of the resolution professional; costs of running the corporate debtor as a going concern; costs incurred at the Government's expense to facilitate the process; and other costs specified by the Board.
- Under regulation 31
- Amounts due to suppliers of essential goods and services (electricity, water, telecom, IT); fees of authorised representatives of a class of creditors; amounts due to a person whose rights are prejudiced by the moratorium on recovering property; the regulatory fee payable to IBBI; IRP expenses to the extent the CoC ratifies them; RP expenses fixed by the CoC; and other costs directly related to the process and approved by the CoC.
- Regulatory fee, regulation 31A
- 0.25% of the realisable value to creditors under an approved plan, where that value exceeds the liquidation value, and 1% of the cost of professionals or other services the IRP or RP hires.
Who Fixes the Fee, Stage by Stage
- 1
Applicant fixes the IRP's expenses
Regulation 33: the applicant fixes the expenses of the IRP, including the IRP's fee, or the NCLT fixes them if the applicant does not. The applicant bears them first.
- 2
CoC ratifies
The CoC reimburses the applicant to the extent it ratifies the IRP's expenses. Only the ratified amount becomes CIRP cost.
- 3
CoC fixes the RP's expenses
Regulation 34: the committee fixes the expenses of the resolution professional, including the fee, and they constitute CIRP costs.
- 4
Minimum fee floor applies
Regulation 34B: for an IRP or RP appointed on or after 1 October 2022, the fee cannot be below the Schedule I minimum, from appointment until the section 30 plan application, the section 33 liquidation application, a section 12A withdrawal application or closure, whichever is earliest. The applicant or CoC may fix more, with recorded reasons.
- 5
Liquidator's fee
When approving a plan or deciding to liquidate, the CoC may also fix the fee the liquidator will be paid (CIRP regulation 39D).
Minimum Monthly Fee for an IRP or RP
Schedule I, Table 1 of the CIRP Regulations, based on the quantum of claims admitted.
| Claims admitted | Minimum fee per month |
|---|---|
| Up to ₹50 crore | ₹1 lakh |
| Above ₹50 crore, up to ₹500 crore | ₹2 lakh |
| Above ₹500 crore, up to ₹2,500 crore | ₹3 lakh |
| Above ₹2,500 crore, up to ₹10,000 crore | ₹4 lakh |
| Above ₹10,000 crore | ₹5 lakh |
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The Performance-Linked Incentive
For plans the CoC approves on or after 1 October 2022, the CoC may pay a performance-linked incentive fee of up to ₹5 crore. One part rewards speed: 1% of realisable value if the plan reaches the NCLT within 165 days of the insolvency commencement date, 0.75% within 270 days, 0.5% within 330 days, nothing after that. The other rewards value: 1% of the amount by which realisable value exceeds liquidation value. Both are paid only after the NCLT approves the plan and payments to creditors begin.
IBBI's own illustration: liquidation value ₹20 crore, realisable value ₹100 crore, plan filed on day 170. The RP can be paid 0.75% of ₹100 crore (₹75 lakh) plus 1% of ₹80 crore (₹80 lakh).
Cut-off Trap: Regulation 31B Changed in June 2026
At the exam cut-off of 4 February 2025, regulation 31B simply required the IP to place the operational status before each CoC meeting and seek approval for all CIRP costs. From 9 June 2026 it adds a Going Concern Assessment Report at the first meeting, prior CoC approval for all costs after that meeting, and estimate-versus-actual statements. The liquidator's fee scale in regulation 4 of the Liquidation Regulations was also rewritten from 2 June 2026. Learn the earlier versions for the exam.
How the Limited Insolvency Examination Tests This
A CIRP case study might give admitted claims of ₹640 crore and ask the minimum monthly fee (₹3 lakh), or give an IRP who spent ₹18 lakh of which the CoC ratified ₹12 lakh and ask how much is CIRP cost (₹12 lakh; the applicant bears the rest). Another favourite: a plan that pays financial creditors before clearing CIRP costs fails section 30(2)(a).
The trap is mixing up who decides. The applicant fixes the IRP's expenses, the CoC ratifies them, the CoC fixes the RP's, and the NCLT steps in only where the applicant has not fixed the IRP's expenses.
FAQs
What are insolvency resolution process costs under IBC?expand_more
Under section 5(13): interim finance and its cost, the RP's fee, costs of running the business as a going concern, Government costs of facilitating the process, and other costs the Board specifies. Regulation 31 of the CIRP Regulations lists the specified items.
Who decides the resolution professional's fee?expand_more
The applicant fixes the IRP's expenses, including the fee, under regulation 33, subject to CoC ratification. The CoC fixes the RP's under regulation 34. Both must respect the minimum fee in regulation 34B and Schedule I.
What is the minimum fee for a resolution professional?expand_more
Between ₹1 lakh and ₹5 lakh a month depending on admitted claims, for an IRP or RP appointed on or after 1 October 2022, under regulation 34B and Schedule I of the CIRP Regulations.
Are CIRP costs paid first in liquidation?expand_more
Yes. Section 53(1)(a) puts insolvency resolution process costs and liquidation costs, paid in full, at the top of the distribution order.
Next steps
- IRP vs RParrow_forward
- Committee of Creditorsarrow_forward
- Section 53 Waterfallarrow_forward
- IP Code of Conductarrow_forward
65 questions, case-study format, negative marking.