Comparative analysis of Corporate Insolvency Resolution Process of Financial and Operational Creditor in India

  • Shobitha Reddy Panyam,
  • M. Sai Deekshitha and P.M. Arun
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  • Shobitha Reddy Panyam

    Student at ICFAI Law School, India

  • M. Sai Deekshitha

    Student at ICFAI Law School, India

  • P.M. Arun

    Student at ICFAI Law School, India

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In the dynamic times of increased stressed assets in the country, the Insolvency and Bankruptcy Code, 2016 is in itself is a landmark development and came as a ray of hope for the increase distressed assets and non-tallying assets in the financial system. Furthermore, for running a business of an entity, the supply of goods and services on credit is as significant as financial system, both are parallelly important for functioning of a business. The Insolvency and Bankruptcy Board established the "Corporate Insolvency Resolution Process" in 2016 in response to the surge in NPAs and the lack of a proper method to address the issue. It refers to insolvency proceedings, in which any corporate debtor who defaults in payment can start the process on their own or with the help of a financial creditor or operational creditor. The Insolvency and Bankruptcy Code, 2016, is without a doubt one of the most significant changes to have occurred in the corporate sectors recently, but the code itself distinguishes between financial and operational creditors by restricting the operational creditor ability to participate in meetings, cast votes, and join committees of creditors. Additionally, it restricts the ability of operational creditorsto vote in the committee of creditors, change the appointment or terms and conditions of the corporate debtor's statutory or interim auditors, or any other stated staff, among other things. It also limits the power of operational creditors to have a right over accessing financial details from resolution professionals. This Article emphasizes on how the distinction between financial and operational creditors causes prejudice against operational creditors during the insolvency process by contravening the principles of equality and natural justice as enriched in the constitution.




International Journal of Law Management and Humanities, Volume 6, Issue 4, Page 2513 - 2528


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