1. Yes, Public Limited Companies Can File for Bankruptcy

• In India, Public Limited Companies are allowed to file for bankruptcy under the Insolvency and Bankruptcy Code (IBC), 2016.
  
• The IBC provides a legal framework for corporate insolvency resolution and liquidation.
  
• A company may voluntarily initiate the process if it is unable to repay its debts and wants to seek protection or restructure.
  
• Filing for bankruptcy allows the company to either revive through a resolution plan or be liquidated in an orderly manner.
  

2. Voluntary Filing by the Company (Debtor-Initiated Insolvency)

• A Public Limited Company can file a voluntary insolvency application with the National Company Law Tribunal (NCLT) under Section 10 of the IBC.
  
• Prerequisites for filing include:
  
  • A default in repayment of debt (financial or operational)
    
  • Approval of the application by a majority of directors and shareholders
    
  • Submission of books of accounts, financial statements, and details of default
    
• Upon admission, NCLT appoints an Interim Resolution Professional (IRP) and imposes a moratorium on legal actions and asset recovery.
  

3. Involuntary Bankruptcy by Creditors

• Apart from the company itself, creditors can also initiate insolvency proceedings if the company defaults:
  
  • Financial creditors (e.g., banks, bondholders) under Section 7
    
  • Operational creditors (e.g., vendors, suppliers) under Section 9
    
• The minimum default amount must be ₹1 crore or more to initiate proceedings.
  
• Once admitted, the company enters the Corporate Insolvency Resolution Process (CIRP), overseen by a Resolution Professional and the Committee of Creditors (CoC).
  

4. Resolution or Liquidation

• The CoC evaluates resolution plans submitted by prospective buyers or investors.
  
• If a plan is approved within the 180–330 day timeline, the company is revived and continues operations.
  
• If no viable plan is approved, the company is moved into liquidation, where its assets are sold and proceeds distributed as per the IBC’s priority list.
  
• The company is eventually dissolved, and its name is removed from the company register.
  

5. Impact and Regulatory Requirements

• Filing for bankruptcy has significant consequences:
  
  • Suspension of the Board of Directors’ powers
    
  • Public disclosures required for listed companies under SEBI regulations
    
  • Possible impact on stock price, credit ratings, and employee morale
    
  • Regulatory filings with ROC, SEBI, and stock exchanges are mandatory during the process.
    
• Bankruptcy is not a failure but a legal remedy to protect business value and creditor rights.