SARFAESI vs. IBC: Analyzing the Intersection of Secured Creditors’ Rights and the Moratorium

From enforcement of two major structures SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act) and IBC (Insolvency and Bankruptcy Code), currently, the scenario in the Indian Banking Sector has changed a lot, specifically in the legal arena concerning insolvency and debt recovery in India. Both tools are of ordeal importance in the field of NPAs and corporate defaults, that work on different principles and processes which often put secured creditors in conflicting situations. While SARFAESI empowers the financial creditor for a speedy recovery of dues by way of enforcement of security interests, IBC, offers a formalized, timebound resolution process for corporate debtors with a moratorium under which creditor actions are stayed. This paper tends to delve into the intersection between such regimes with special reference to how the moratorium under IBC impinges on the rights of secured creditors with reference to SARFAESI proceedings.