Case Law Analysis
|National Company Law Appellate Tribunal
Section 7 IBC | Loan Recall Triggered by Material Adverse Change Sufficient to Initiate CIRP Despite Pending Arbitration Challenge : NCLAT
The NCLAT has ruled that a financial creditor may initiate Corporate Insolvency Resolution Process under Section 7 of the IBC solely on the basis of a loan recall triggered by a Material Adverse Change clause, even if the debtor challenges the recall through arbitration. This clarifies that MAC-based defaults are actionable under IBC without waiting for arbitration outcomes, strengthening creditors' ability to act swiftly on contractual breaches that undermine financial viability.