Admission of a Section 7 application under the Insolvency and ...

Developer's interest-bearing deposit classified as financial debt; NCLAT upholds insolvency admission.

Case Laws IBC

October 17, 2024

Admission of a Section 7 application under the Insolvency and Bankruptcy Code, 2016, concerning the classification of a debt as a Financial Debt within the meaning of Section 5(8). The key points are: The debt arose from a Development Agreement involving the payment of a Security Deposit and an additional amount carrying interest at 18% per annum, compounded quarterly, indicating the time value of money. The Corporate Debtor acknowledged the interest liability in its balance sheet. The Adjudicating Authority correctly held that the debt qualified as a Financial Debt, and the creditor was a Financial Creditor, not an Operational Creditor. The NCLAT upheld the Adjudicating Authority's order, finding no error in admitting the Section 7 application and classifying the debt as a Financial Debt. The appeal was dismissed.

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Admission of a Section 7 application under the Insolvency and ...

Developer's interest-bearing deposit classified as financial debt; NCLAT upholds insolvency admission.

Case Laws IBC

October 17, 2024

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