After the failure of the IAR CV-11, the Frenchman Lucien Virmoux took things very personal, so he left the IAR company and returned to France. Elie Carafoli, however, was not going to give up so easily. Even before the ARR commision had announced its decision, he was already working on its next fighter design : the IAR-12.

Carafoli knew that the fuselage was well conceived and that it didn't have any faults, so he kept it mostly unchanged, and started to work on the weak points : maneuvrability and control. A new tail, with an enlarged, round-shaped rudder, replaced the old one, giving the plane a more conventional look and improving in-flight control. Total height was also increased this way, by more than a meter ( over 40% of the original size ). To increase maneuvrability, the wings were enlarged and the wingtips became round, instead of the rectangular ones used by Virmoux.

The one new piece of equipment was the "anti-crash" pylon installed just behind the cockpit, with a Venturi-type tube on its top. This feature was supposed to protect the pilot in case of an emergency landing, by keeping the fuselage from crushing the pilot if the aircraft got turned over during the landing. Indeed, the IAR CV-11/C1's pilot had been killed exactly this way when the prototype was lost.

A Lorraine-Dietrich engine was once again selected as powerplant ; this time it was the Lorraine-Dietrich 12Eb. It had 12 cylinders mounted in a "W" configuration, but it could produce only 450 HP at 1900 r.p.m. It was however lighter, so engineers hoped to achieve a higher speed than that of the IAR CV-11.

The aircraft flew for the first time in mid-1932, but this time the test flights yielded dessappointing results. Handling characteristics proved to be unsatisfactory, as the extra drag caused by the "anti-crash" pylon severely hindered the control surface's action. Maximum speed at sea level also decreased to 294 km/h, mainly for the same reason.