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ARTICLE · 24 NOVEMBER 2023

A Preference Shareholder Is Not A Financial Creditor Unless The Preference Shares Become Due For Redemption

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EPC Constructions India Limited ("EPC/Petitioner") filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ...

IndiaInsolvency/Bankruptcy/Re-Structuring
Sidharth Sethi
Sidharth Sethi
Kunal Saini
Kunal Saini
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The National Company Law Tribunal, Kolkata Bench ("NCLT"), in EPC Constructions India Limited through its Liquidator – Abhijit Guhathkurtha v. M/s Matix Fertilizer and Chemicals Limited1 has ruled that preference shareholders cannot step into the shoes of a financial creditor unless their preference shares become redeemable.

Brief Facts

  1. EPC Constructions India Limited ("EPC/Petitioner") filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("IBC") seeking to initiate corporate insolvency resolution process ("CIRP") against M/s Matix Fertilizer and Chemicals Limited ("Corporate Debtor").
  2. The Petitioner had infused an amount of INR 250,00,00,000 (Indian Rupees two hundred and fifty crore) as a sub-debt into the capital of the Corporate Debtor and in lieu of such infusion, 25,00,00,000 (twenty five crore) cumulatively redeemable preference shares ("CRPS") were issued to the Petitioner with a face value of INR 10 (Indian Rupees ten)

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