Operational Creditors Under The Insolvency And Bankruptcy Code, 2016

A division bench of the Supreme Court hearing a batch of petitions filed by some 40 companies challenging the validity of the Insolvency and Bankruptcy Code, 2016 observed that operational creditors of companies that are undergoing corporate insolvency resolution process should have a say in the committee of creditors (CoC) and get voting rights proportional to the debt owed to them.

The bench of Justice Rohinton Nariman and Justice Navin Sinha noted that in some cases debt owed to operational creditors by the companies is huge, but at present they do not have a say in the process, only financial creditors like banks have a say. So far in its response the government has said that the purpose of bringing in IBC was to ensure speedy resolution of debt and not just to help financial creditors. AG Venugopal submitted that petitioners are challenging various provisions which may mean doing away with the bill entirely, which he argued against vehemently. Court asked