A borrower account is deteriorating. The lender has issued notices. The operational creditors are restless. The IBC clock is visible on the horizon: once a Section 7 or Section 9 application is admitted, the business enters CIRP, the management loses control, the costs escalate and the recovery rate for financial creditors, based on published IBBI data, averages between 32% and 36% of admitted claims.
The pre-IBC window, the period before an application is filed or before it is admitted, is the period where the economics of resolution are most favourable to both the lender and the borrower. A restructuring agreed in this window preserves the business as a going concern, avoids the costs and delays of CIRP, and typically produces a higher recovery than formal insolvency.
The window is narrow. It requires speed, financial credibility and the ability to produce a proposal that the lender’s credit committee will accept within 14 to 21 days.
Why most pre-IBC proposals fail
They fail because they are built on aspiration rather than evidence. The borrower’s proposal says “the business will recover.” The credit committee asks: based on what cash flow? The proposal shows a projected recovery. The committee asks: how does this compare to what the borrower projected last year, and the year before? The answer, usually, is that the borrower over-projected in both years. The committee has no basis for believing the current projection.
The proposal fails not because the business cannot be saved but because the proposal does not demonstrate, with financial evidence, that saving it produces a better outcome for the lender than CIRP.
How Northrop builds it differently
Gopal Banka, as a registered Insolvency Professional, understands the IBC framework from inside. He knows what a resolution professional evaluates, what a committee of creditors considers, what the NCLT examines and what recovery rates CIRP actually produces in the relevant sector. That knowledge shapes how the pre-IBC proposal is constructed: not as a borrower’s plea but as a financial comparison showing the lender that the proposed restructuring produces a higher, faster, more certain recovery than the alternative.
Day 1 to 5: Forensic financial assessment.
Ashish Chaudhary conducts a compressed forensic assessment of the borrower’s actual financial position. Not the reported position. The actual position: what cash does the business generate monthly after funding its operations? What is the realisable value of the assets (not book value, realisable value)? What are the total obligations across all creditors? What is the borrower’s actual capacity to pay, per month, with evidence?
In one engagement, a manufacturing unit had Rs 8 crore of outstanding debt and a stated debt-service obligation of Rs 45 lakh per month. The forensic cash-flow assessment showed actual operating cash generation of Rs 28 lakh per month. The original sanction terms were mathematically unserviceable. No amount of management commitment could change the arithmetic. The restructuring had to start from the number the business could actually produce.
Day 6 to 14: Proposal construction.
Gopal builds the restructuring proposal on the forensic foundation. Projected cash flows under base, moderate and stressed scenarios, each built from the demonstrated cash-generation capacity, not from management’s aspirational forecast. Proposed repayment schedule aligned to the business’s actual capacity. Rate and tenure adjustments with the financial rationale for each. Security enhancement or rebalancing where applicable. Promoter contribution (equity infusion, personal asset pledge, income commitment) demonstrating skin in the game.
The proposal includes the comparison the credit committee needs to see: recovery under the proposed restructuring versus estimated recovery under CIRP, based on published recovery rates, estimated CIRP costs and the timeline differential.
In the manufacturing engagement, the proposal showed: restructuring recovery of 72% over 36 months. Estimated CIRP recovery of 34% over 18 to 24 months (based on sector-specific IBBI data). The 38-percentage-point differential, on Rs 8 crore of exposure, was Rs 3 crore of incremental recovery for the lender. The credit committee approved the restructuring.
Day 15 to 21: Lender negotiation.
Gopal presents the proposal to the lender’s credit team and negotiates directly. Every element is supported by documented evidence. Every concession requested from the lender is justified by the borrower’s demonstrated capacity. Every commitment from the borrower is specified, quantified and time-bound.
Pratham Sharma prepares the supporting financial model that the credit team can stress-test independently. The model is delivered in a format the lender’s analyst can work with, not as a locked PDF but as a functional model with transparent assumptions.
Post-restructuring monitoring
A restructuring agreed and then unmonitored will fail. Ashish provides quarterly monitoring against the restructuring plan: actual cash flow versus projected, covenant compliance, repayment adherence and early warning of deviations that require proactive communication with the lender.
What the lender and the borrower receive
A forensic cash-flow assessment establishing the borrower’s actual payment capacity. A restructuring proposal with three-scenario projections, repayment schedule, promoter contribution and CIRP-comparison analysis. Direct negotiation with the lender’s credit team. A financial model the lender can stress-test independently. Post-restructuring quarterly monitoring.
For IBC-urgent matters: diagnostic in 5 days, proposal in 14 days, lender engagement immediately.