Use Case · Procurement · Insolvency Check

Counterparty Insolvency Check Before Signing a Contract (2026)

Updated for 2026 · Claw Editorial

Before you sign a contract, you weigh whether the other side can perform and pay. Insolvency is the sharpest version of that question. If a counterparty enters a corporate insolvency resolution process after you have delivered goods or started a project, the money it owes you does not simply get paid. A moratorium freezes your recovery, you become a creditor who must file a claim, and as an ordinary supplier you usually rank low in the order of payment. That is why a counterparty insolvency check belongs in onboarding, not in the dispute that comes later. This page explains what a CIRP admission does to a contract, where the check sits, and how to run it with monitoring across your counterparties. Last verified October 2026.

01The short answer

Check a counterparty for insolvency before you sign by searching the IBBI public announcements, the NCLT and NCLAT records and MCA data under its exact name. The reason is what a CIRP admission does to your money: the Section 14 moratorium freezes your recovery, you must file a claim with the resolution professional, and as an ordinary supplier you are usually an operational creditor ranked low in the Section 53 waterfall. A check at onboarding, kept live through the contract, lets you set payment terms, security and advances with that risk in view.

02What insolvency does to your contract

A counterparty insolvency hits a contract harder than a routine dispute, in three ways:

• Your recovery freezes. From the insolvency commencement date, the Section 14 moratorium stays suits and recovery against the company, so you cannot simply sue for your unpaid invoices. See the Section 14 moratorium.
• You become a creditor in a queue. You have to file a claim with the resolution professional by the public announcement deadline, and an unpaid supplier is usually an operational creditor, which ranks below secured and financial creditors in the Section 53 waterfall. See the liquidation waterfall.
• Performance is disrupted. If the counterparty is a supplier to you, delivery can stall; if it is a customer, your receivable is stuck. During the process, essential supplies and going-concern operations are handled under the Code, but your commercial position still changes.

03Who and what to check

The check reaches past the signing entity:

Catching a petition that is filed but not yet admitted is valuable, because it is an early warning before the moratorium even begins.

04Where the check sits in onboarding

The insolvency check is cheapest and most useful before the ink is dry:

• At vendor or customer onboarding, before a master agreement or a first large order, as part of due diligence. For the wider litigation side of onboarding, see litigation checks before onboarding a vendor.
• At contract renewal or a large new order, when your exposure steps up.
• When you extend credit, such as supplying on terms or paying an advance, because that is when a counterparty insolvency hurts most.

What you find shapes the deal: tighter payment terms, an advance or security, a shorter credit period, or a decision to walk away.

05From one-time check to monitoring

A check at signing only speaks for that day. Contracts run for months or years, and a counterparty that was sound at onboarding can slide into insolvency later. For any counterparty that carries real exposure, the check becomes a watch: the same names are monitored through the life of the contract, and a fresh petition or an admission triggers an alert so you can stop further supply, call in a receivable, or prepare a claim in good time. Running this by hand across the IBBI, NCLT, NCLAT and MCA sources for every active counterparty does not scale, which is why most procurement and finance teams use a service that scans and alerts.

06Reading the result honestly

Read any insolvency check with two caveats before you rely on it:

• "Nothing on record" is not a clean chit. It means no insolvency matter was found in the sources searched, on the date searched, under the names searched. A matter under a group company, a very recent filing, or an uncovered forum can still exist.
• It is not a credit score. An insolvency check shows court and tribunal records; it does not rate the counterparty creditworthiness and does not replace your own commercial and credit assessment. A hit on a common name needs a human check.

The check is a contracting-risk input, not a verdict and not legal advice on any deal.

07Where Claw fits

Claw is an all-in-one legaltech platform for Indian advocates, law firms, and corporate legal teams, combining AI-based case search, an AI legal assistant (Legal GPT), case management, and compliance automation across all Indian courts and tribunals.

ClawScore (at clawscore.clawlaw.in) is Claw litigation and risk intelligence service, and it fits the point where you onboard and contract with a counterparty. Name the counterparty, its directors and its group companies, and ClawScore finds and then tracks their insolvency across the NCLT and NCLAT, together with wider litigation across 9,102 courts, benches and forums, in one scored workbook with a risk band, a matters sheet, a related-parties sheet and a coverage sheet, each finding carrying a match confidence so a common-name hit is flagged. Constant Monitoring watches your active counterparties and reports New filings, Changed movement and Closed disposals on daily, weekly or monthly scans with alerts, so a counterparty that enters insolvency after signing does not surprise you. Results return in under 5 seconds, judgment search spans 30 crore+ judgments and orders with Supreme Court decisions from 1950 and High Court decisions from 1990, and Claw does not use your searched names or documents to train its AI models. A ClawScore search starts from Rs 500 per search, and monitoring is Rs 300, Rs 600 or Rs 3,000 per entity per month by scan frequency. "Nothing on record" means nothing was found in these registries on the date searched under the names searched, and the workbook is a contracting-risk input, not a verdict and not a credit score.

To check a counterparty for insolvency and wider litigation before you sign, run a case search across Indian courts by name across every forum at once.

08Sources and further reading

• Insolvency and Bankruptcy Board of India (public announcements): ibbi.gov.in
• National Company Law Tribunal: nclt.gov.in
• Ministry of Corporate Affairs: mca.gov.in
• Claw: clawlaw.in

This page is general information for an Indian B2B audience, not legal advice. An insolvency check supports a contracting decision and does not replace counsel on any transaction.

09Frequently asked questions