Maintainability of an application for initiation of Corporate ...

Claim for performance pay not an operational debt under IBC; Multiple notices don't make it payable.

Case Laws IBC

November 23, 2024

Maintainability of an application for initiation of Corporate Insolvency Resolution Process (CIRP) u/s 9 of the Insolvency and Bankruptcy Code (IBC). The key points are: The claim for performance pay, being subject to subjective assessment criteria, does not constitute an "operational debt" or a "debt" under the IBC. The Appellant issued both Form 3 and Form 4 notices u/s 8 of the IBC, indicating uncertainty about the nature of the claim. The issuance of multiple notices u/s 8 does not make the claim payable as an operational debt. The claim raised by the Operational Creditor does not qualify as an operational debt, and hence, the initiation of CIRP u/s 9 against the Corporate Debtor is not justified. The Adjudicating Authority's rejection of the claim through the impugned order is valid and does not warrant interference by the Appellate Tribunal u/s 61 of the IBC. Consequently, the appeal is dismissed.

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Maintainability of an application for initiation of Corporate ...

Claim for performance pay not an operational debt under IBC; Multiple notices don't make it payable.

Case Laws IBC

November 23, 2024

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