The Supreme Court on Friday upheld the Insolvency and Bankruptcy Code 2016 (IBC) in its entirety and constitutional validity, causing a setback to operational creditors who include suppliers, customers and contractors.
A bench headed by Justice Rohinton F Nariman refused the pleas to give operational creditors’ parity with financial creditors while deciding a batch of petitions challenging the IBC.
The operational creditors wanted to be treated at par with secured creditors like banks and financial institutions who have the first claim over the money coming through the proceedings under the insolvency law.
The verdict upheld the Section 29A of the Insolvency Code that bars promoters of a company facing insolvency proceedings from bidding to regain its control.