Position Of Secured Creditor (Not Being Financial Or Operational Creditor) Under IBC

The Supreme Court in its recent judgement Vistra ITCL (India) Ltd. and Ors. V. Dinkar Venkatasubramanian and Ors., discussed and clarified the treatment of a secured creditor who would not fall under the category of the financial creditor or operational creditor as per Insolvency and Bankruptcy Code, 2016 ("IBC"). While passing the judgement, the Apex Court explained the amendments carried out in IBC alongwith other various important related provisions under the IBC.

Brief Facts of the Case:

Amtek Auto Limited ("Corporate Debtor") approached appellants for a short-term loan facility of INR 500.00 crores for its group companies viz. Brassco Engineers Ltd. and WLD Investments Pvt. Ltd ultimately to be used by the Corporate Debtor. The loan was to be secured by pledging 16,82,06,100 equity shares of face value of INR 2/­ each of JMT Auto Ltd. held by the Corporate Debtor.