#financial creditor

The Supreme Court ruled that contractual rights over nominee directors, budget approvals, and project revenues constitute 'participation in policy-making' under IBC Section 5(24)(m)(i), a lower threshold than Section 29A control, rendering debenture holders and trustees related parties ineligible for the CoC. A post-CIRP assignment to bypass this bar was held mala fide.

The Supreme Court held that an Information Utility’s record creates a presumption of default under IBC Section 7, making quantum disputes and profitability irrelevant for admission. This eases CIRP initiation for creditors while raising burden on debtors.

NCLAT rules that a financial creditor’s interest default exceeding ₹1 crore constitutes a valid default under Section 7 of the IBC, even if the corporate debtor breached a One Time Settlement (OTS). The ruling clarifies that service of notice via MCA-registered email suffices for CIRP initiation, impacting creditors’ rights and insolvency proceedings.

The NCLAT has ruled that a welfare association can initiate corporate insolvency proceedings under Section 7 of the IBC by submitting affidavits from 98 out of 152 homebuyers, even if nine affidavits contain minor discrepancies. This clarifies that procedural imperfections do not nullify financial creditor status when the core authorization and identity verification are intact, empowering homebuyer collectives to act collectively under the IBC.

Supreme Court holds that a bank cannot initiate insolvency proceedings under Section 7 of the IBC if the loan was disbursed to a builder rather than the corporate debtor. The ruling underscores that financial creditor status requires a direct lending arrangement, not merely a contractual transaction.

The Supreme Court has ruled that corporate guarantees qualify as financial debt under Section 5(8) of the IBC irrespective of non-disclosure in financial statements or stamping irregularities, affirming that procedural defects cannot override substantive creditor rights. This strengthens the position of financial creditors in CIRP and curbs reliance on technicalities to defeat claims.

NCLAT rules that a recovery certificate issued against a principal borrower triggers a fresh three-year limitation period for financial creditors to initiate CIRP against corporate guarantors. This holding clarifies the interplay between debt recovery mechanisms and IBC timelines, impacting asset reconstruction companies and lenders pursuing guarantor liability.

Supreme Court holds that unimplemented restructuring proposals cannot reset default date under Section 7 IBC; admission requires only proof of financial debt and default.

Supreme Court holds that joint insolvency petitions against interlinked real estate developers are maintainable and threshold of 100 allottees is assessed as of petition filing date.