Status Quo of Operational Creditors under IBC – A Judicial Analysis

  • Prerna Jain Kala
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  • Prerna Jain Kala

    Student at K.L.E. Society’s Law College, Bangalore, India

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The Insolvency and Bankruptcy Code, 2016 (the "Code”/ “IBC”) was enacted with the purpose of consolidating, bringing the concept of insolvency under one single piece of legislation, and establishing a single venue for insolvency settlement. The Code was also enacted as a result of prior legislation's failure. The Code's primary purpose is to resolve and revive industries, but if that isn't possible, it provides a way for creditors to be paid. In addition to this, the IBC aimed to bring about a paradigm change away from the idea of the debtor being in control and toward a process that was led by the creditors. When a debtor is unable to pay its debts, the Code becomes an operational tool for the creditors to guide them through the insolvency resolution process. It has provided the creditors their statutory rights and streamlined the manner to aid the debtor without destroying the creditors' benefits. The Code has been utilised by creditors as a means of recovery, and corporate borrowers have also been led astray by the creditors' recovery strategies out of concern that an insolvency petition will be admitted against the corporate debtors and the repercussions that will follow from this. The most recent events and decisions made by the Apex Authority, on the other hand, have had the consequence of putting the Operational Creditors in a disadvantageous position. In the event that a creditor's claim is contested, the operational creditors are forced to consider whether it is in their best interest to present the claim to the Resolution Professional or to proceed with the adjudicatory process that is being handled by the Judicial Bodies in light of the moratorium being lifted. This article makes an effort to study the recent judgments that have been handed down by the courts, as well as the mechanism in the Insolvency and Bankruptcy Code 2016, and it also makes an effort to put forward the present posture of operational creditors in accordance with the Code


Research Paper


International Journal of Law Management and Humanities, Volume 5, Issue 3, Page 2039 - 2045


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