Effect of bankruptcy order
Section 128 of the Insolvency and Bankruptcy Code, 2016 deals with effect of bankruptcy order. On the passing of the bankruptcy order under section 126,— (a) the estate of the bankrupt shall vest in the bankruptcy trustee as provided in section 154; The Act was enacted on 28 May 2016.
(1) On the passing of the bankruptcy order under section 126,—
(a) the estate of the bankrupt shall vest in the bankruptcy trustee as provided in section 154;
(b) the estate of the bankrupt shall be divided among his creditors;
(c) subject to provisions of sub-section (2), a creditor of the bankrupt indebted in respect of any debt claimed as a bankruptcy debt shall not—
(i) initiate any action against the property of the bankrupt in respect of such debt; or
(ii) commence any suit or other legal proceedings except with the leave of the Adjudicating Authority and on such terms as the Adjudicating Authority may impose.
(2) Subject to the provisions of section 123, the bankruptcy order shall not affect the right of any secured creditor to realise or otherwise deal with his security interest in the same manner as he would have been entitled if the bankruptcy order had not been passed:
Provided that no secured creditor shall be entitled to any interest in respect of his debt after the bankruptcy commencement date if he does not take any action to realise his security within thirty days from the said date.
(3) Where a bankruptcy order under section 126 has been passed against a firm, the order shall operate as if it were a bankruptcy order made against each of the individuals who, on the date of the order, is a partner in the firm.
(4) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.
Section 128, The Insolvency and Bankruptcy Code, 2016 (Act 31 of 2016).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
Questions about Section 128
What does Section 128 of the Insolvency and Bankruptcy Code deal with?
Section 128 of the Insolvency and Bankruptcy Code is headed "Effect of bankruptcy order". On the passing of the bankruptcy order under section 126,— (a) the estate of the bankrupt shall vest in the bankruptcy trustee as provided in section 154;
How do I find court cases under Section 128 of the Insolvency and Bankruptcy Code?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Insolvency and Bankruptcy Code 128, section 128 Insolvency and Bankruptcy Code, section 128 of the Insolvency and Bankruptcy Code. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome.
What should I read with Section 128 of the Insolvency and Bankruptcy Code, and has it changed?
Its own text turns on section 123 (Application by creditor), section 126 (Bankruptcy order), section 154 (Vesting of estate of bankrupt in bankruptcy trustee), so none of them can safely be read on its own.
When was Section 128 of the Insolvency and Bankruptcy Code enacted?
Section 128 of the Insolvency and Bankruptcy Code, cited as Insolvency and Bankruptcy Code 128, was enacted on 28 May 2016 as Act 31 of 2016. It is in force as at the date shown on this page.
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Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 16 Oct 2026. This page is not a substitute for legal advice.