53 (1) (h)

Whether Operational Creditor has priority in payment in distribution under Section 53 of IBC over Unsecured Financial Creditor who is a related party of the Corporate Debtor? – Times Innovative Media Ltd. Vs. Pawan Kumar Aggarwal (Liquidator) and Anr. – NCLAT New Delhi

Hon’ble NCLAT held that:

(i) On plain reading of Section 53(1), it is clear that financial debts owed to unsecured creditors ranked higher than debt of operational creditor.
(ii) Scheme of Regulations 2016 does not indicate that related party is excluded from filing a claim.
(iii) Appellant cannot claim any priority in distribution of assets of the corporate debtor as compared to unsecured financial creditor.

Whether Operational Creditor has priority in payment in distribution under Section 53 of IBC over Unsecured Financial Creditor who is a related party of the Corporate Debtor? – Times Innovative Media Ltd. Vs. Pawan Kumar Aggarwal (Liquidator) and Anr. – NCLAT New Delhi Read Post »

There is no provision of the IBC, which mandates that the related party should be paid in parity with unrelated party – West Coast Paper Mills Ltd. Vs. Bijay Murmuria, RP of Fort Gloster Industries Ltd. and Ors. – NCLAT New Delhi

Hon’ble NCLAT held that there was no provision of the IBC, which mandates that the related party should be paid in parity with unrelated party. Any prohibition of differential payment to different class of creditors in the resolution plan is ultimately, subject to the commercial wisdom of CoC and no fault can be attached to the resolution plan merely for not making provisions for a related party, so long as provision of the IBC and CIRP regulations are met.

There is no provision of the IBC, which mandates that the related party should be paid in parity with unrelated party – West Coast Paper Mills Ltd. Vs. Bijay Murmuria, RP of Fort Gloster Industries Ltd. and Ors. – NCLAT New Delhi Read Post »

A claim of a related party, whether in the nature of loan or otherwise, should rank subordinate to the claim of operational creditors, and should be treated at par with equity shareholders under section 53(1)(h) of the IBC – J. R. Agro Industries P Ltd. Vs. Swadisht Oils Pvt. Ltd. – NCLT Allahabad Bench

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A claim of a related party, whether in the nature of loan or otherwise, should rank subordinate to the claim of operational creditors, and should be treated at par with equity shareholders under section 53(1)(h) of the IBC – J. R. Agro Industries P Ltd. Vs. Swadisht Oils Pvt. Ltd. – NCLT Allahabad Bench Read Post »

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