How does insolvency process work?
When a company defaults on making its payments to creditors, the financial creditor, operational creditor or the company itself can appeal to National CompanIy Law Tribunal to initiate insolvency resolution process.
As per Livemint:
An interim resolution professional is appointed with the power to take charge of the company which has defaulted. The professional’s task is to take necessary steps to revive the company. Appointed professional also has the power to raise fresh funds to continue operations.
The IRP is granted 180 days to find a resolution, which can be extended by 90 days. If the IRP fails to find a resolution by then, the company is liquidated to pay the creditors.