Anuj Deshmukh, LLM, Symbiosis Law School, Pune
ABSTRACT:
India's bankruptcy and insolvency laws have radically changed thanks to the historic Insolvency and Bankruptcy Code, 2016 (IBC). In addition to strengthening creditors' rights, it has brought in a timely and effective process for ending insolvency and bankruptcy proceedings. Operational creditors are a significant category of creditors essential to how businesses run. They consist of vendors, suppliers, staff members, and other individuals who give goods and services to companies on credit. When a corporate debtor became insolvent, operational creditors' rights were severely restricted before the IBC was passed. Regarding repayment, they were frequently put at the back of the queue, and their cases were often resolved at a steep discount. The IBC has dramatically enhanced the position of operational creditors in the insolvency and bankruptcy process. In addition to giving them a voice in decision-making, it has granted them the authority to file for bankruptcy against corporate debtors. In addition, the IBC stipulates several safeguards for operational creditors' interests, including the right to know the corporate debtor's financial standing, the ability to join the Committee of Creditors, and the entitlement to a reasonable portion of the money raised from the sale of the corporate debtor's assets. The IBC is not without critics, though. Some contend that the Code has tipped the scales against operational creditors and favored financial creditors. Financial creditors, for instance, are entitled to veto any resolution plan that does not call for the complete payment of their claims. Operational creditors may have to accept a smaller fee for the resolution plan to be approved, which could put them at a disadvantage. The IBC has positively impacted operational creditors' rights despite its drawbacks. They now have more control over the bankruptcy and insolvency procedures, and their chances of getting paid back have also increased.
Keywords: (Insolvency and Bankruptcy Code, 2016, IBC, Operational creditors, Insolvency resolution, financial creditors, CoC, Corporate insolvency)
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