The Insolvency and Bankruptcy Code, 2016 has seen its share of twists and turns. One more twist may be lying in wait; operational creditors seeking a voice alongside financial creditors in the insolvency process.
A financial creditor is one who has lent money to the company, and an operational creditor is a vendor who has supplied goods or services and is owed money by the company.
In the insolvency food chain, secured financial creditors rule the roost at the all-powerful committee of creditors (CoC). This is logical, no doubt. Banks should have a first claim to the proceeds of resolution when a borrower has defaulted on their loans. That is key for them to recover bad loans.
But other creditors are also victims. The hie…
Read the full article at: https://www.moneycontrol.com/news/business/quick-take-operational-creditors-seeking-a-seat-at-the-ibc-high-table-could-muddy-insolvency-waters-3304451.html