From Periphery To Recognition: Operational Creditors In Light Of The Swiss Ribbons Ruling
- IJLLR Journal
- Jul 20
- 1 min read
Shreya Singh Parihar, Assistant Professor of Law, Amity Law School, Amity University Gwalior
ABSTRACT
The Insolvency and Bankruptcy Code (IBC), 2016 introduced major reforms to India’s insolvency framework by establishing a structured, time-bound resolution mechanism and distinguishing between financial and operational creditors. However, this creditor classification has sparked significant debate over the unequal treatment of operational creditors during the Corporate Insolvency Resolution Process (CIRP). While financial creditors hold voting rights within the Committee of Creditors (CoC), operational creditors are largely excluded from essential decision-making, raising concerns over equity and procedural fairness.
This paper critically assesses whether the unequal treatment of operational creditors under the IBC aligns with constitutional principles, is economically rational, and can withstand legal scrutiny. It delves into judicial interpretations, with a particular focus on the Supreme Court’s ruling in Swiss Ribbons v. Union of India, to understand the reasoning behind such differentiation. The paper further examines whether the current legal framework offers sufficient safeguards to operational creditors and identifies potential reforms to promote a more equitable insolvency process.
By employing doctrinal analysis, incorporating views from key stakeholders, and reviewing relevant case law and policy materials, this study seeks to enrich the broader discourse surrounding creditor rights and the ongoing reform of insolvency law in India.
Keywords: Insolvency and Bankruptcy Code 2016, Operational Creditors, Financial Creditors, Committee of Creditors.
