Corporate Debt Recovery: Financial Creditor Wins Right to Initiate Insolvency Proceedings Under Section 7 of Insolvency Code

NCLAT held that the Section 7 application by the ARC against the Corporate Debtor was maintainable. The Tribunal found that a financial debt existed, with an outstanding amount of Rs. 21.40 crore, and a clear default by the Corporate Debtor. The Global Settlement Agreement (GSA) did not alter the fundamental nature of the financial debt, and the creditor retained the right to initiate insolvency proceedings. The Tribunal emphasized that the debt was due and payable, as confirmed by the DRT decree, and the default was above the statutory threshold. Consequently, the NCLAT dismissed the appeal, upholding the Adjudicating Authority's order admitting the Section 7 application. .....

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