Ecommerce Sales During CIRP: Can Online Operations Continue in India?

In India, the Corporate Insolvency Resolution Process (CIRP) often sparks uncertainty for businesses. One pressing question for e-commerce leaders is: can an ecommerce business continue online sales during CIRP? The answer is nuanced, and understanding it is critical for maintaining operations, revenue, and customer trust during insolvency proceedings.

Understanding the Challenge: Ecommerce Sales During CIRP

The CIRP, governed under India’s Insolvency and Bankruptcy Code (IBC), primarily aims to protect the value of a company while ensuring fair recovery for creditors. During this period, companies often face operational restrictions, including constraints on financial transactions.

For e-commerce businesses, this raises key concerns:

• Can the website remain operational?
• Are transactions and logistics allowed?
• How can customer trust be maintained when insolvency news spreads?

According to a 2023 report by Statista, India’s e-commerce market reached $111 billion, growing at 22% annually, highlighting the stakes for companies seeking continuity during CIRP.

Regulatory Insights: Online Sales During CIRP

The Insolvency and Bankruptcy Code allows ongoing operations, but with strict oversight:

• Resolution Professional (RP) Authority: The RP manages all critical decisions, including online sales and cash flow management.
• Operational Necessity: E-commerce platforms can continue sales if it helps preserve asset value or maintains business continuity.
• Creditor Approval: Significant operational changes, including promotional offers or inventory liquidation, require approval from the Committee of Creditors (CoC).

In practice, this means companies can conduct ecommerce sales during CIRP, but every transaction must align with the resolution plan and regulatory compliance.

Practical Implications for E-Commerce Businesses

Maintaining online operations during CIRP requires careful strategy:

1. Cash Flow Management: Ensure every transaction is tracked and reported to the RP to avoid legal complications.
2. Customer Communication: Transparent updates on shipping timelines and service reliability help retain trust.
3. Inventory Planning: Limit bulk discount campaigns unless approved by creditors to prevent value erosion.
4. Technology Continuity: Keep payment gateways, website hosting, and customer service fully functional.

Industry insight from a leading management consultant suggests that companies continuing ecommerce sales during CIRP can maintain up to 70% of pre-CIRP revenue if operations are carefully managed.

Real-World Examples

Several e-commerce companies in India have successfully navigated CIRP while continuing online operations:

• Company A, a mid-sized marketplace, continued fulfilment for existing orders under RP supervision, protecting supplier relationships and customer loyalty.
• Company B strategically paused new sales but kept its digital platforms active, preventing brand erosion and facilitating smooth acquisition post-CIRP.

These examples show that a structured, transparent approach is essential for sustaining online business during insolvency.

Future Outlook: Ecommerce Operations in Insolvency Scenarios

Looking ahead, several trends are emerging:

• Digital-first CIRP Strategies: Companies may increasingly use automated reporting tools to ensure compliance while running online operations.
• Hybrid Resolution Plans: Combining partial online sales with phased restructuring will become a common approach.
• Investor Confidence: Clear, compliant online operations during CIRP can enhance valuations and attract new investors.

Businesses that proactively manage ecommerce sales during CIRP are better positioned to survive, retain customers, and achieve smoother resolution outcomes.

Actionable Recommendations

Business leaders should consider these strategic imperatives:

1. Collaborate closely with the RP and CoC to get approval for essential online sales.
2. Maintain robust financial reporting and transparency for every transaction.
3. Communicate openly with customers about service timelines to retain brand trust.
4. Leverage technology to optimise logistics and digital storefront continuity.

Conclusion

Navigating ecommerce sales during CIRP in India is challenging but feasible. Companies that align operations with regulatory guidelines, maintain transparency, and protect brand value can continue generating revenue while ensuring creditor satisfaction. The right strategy transforms uncertainty into a structured path toward recovery and growth.

About LawCrust

LawCrust Global Consulting Ltd. delivers cutting-edge Hybrid Consulting Solutions in Management, Finance, Technology, and Legal Consulting to ambitious businesses worldwide. Recognised for our cross-functional expertise and hybrid consulting approach, we empower startups, SMEs, and enterprises to scale efficiently, innovate boldly, and navigate complexity with confidence. Our services span key areas such as Investment Banking, Fundraising, Mergers & Acquisitions, Private Placement, and Debt Restructuring & Transformation, positioning us as a strategic partner for growth and resilience. With an integrated consulting model, fixed-cost engagements, and a virtual delivery framework, we make business transformation accessible, agile, and impactful.

For expert legal help, please contact us:

• Email: inquiry@lawcrustbusiness.com