Respecting Inter Se Priorities Of Secured Creditors – Key To Value Maximization In Liquidation Process

In its interim order dated 29^th June 2021 in Stressed Asset Stabilisation Fund (SASF) Vs. Technology Development Board¹, the Supreme Court of India has stayed the operation of the judgement of the National Company Law Appellate Tribunal (“NCLAT”) in Technology Development Board v. Anil Goel (“Technology Development Board”)². In Technology Development Board, the NCLAT had ruled that inter se priorities of secured creditors will not prevail in the liquidation waterfall under section 53 the Insolvency and Bankruptcy Code, 2016 (“IBC”). In this article, we will briefly discuss the need for an intervention by the Supreme Court in this regard.

In its observations while overseeing the drafting process of the Insolvency and Bankruptcy Code, the Bankruptcy Law Reforms Committee (“BRLC”) identified that the mechanism for resolving insolvency was a key factor holding back the credit market in India. One of the primary objectives of the Insolvency and Bankruptcy Code, 2016