Maintainability of an application for initiation of Corporate ...

Claim for Performance Pay Rejected: Not an Operational Debt Under IBC, Appeal Dismissed Due to Ambiguity in Notices.

November 23, 2024

Case Laws IBC AT

Maintainability of an application for initiation of Corporate Insolvency Resolution Process (CIRP) u/s 9 of the Insolvency and Bankruptcy Code (IBC). The key points are: The claim for performance pay, being subject to subjective assessment criteria, does not constitute an "operational debt" or a "debt" under the IBC. The Appellant issued both Form 3 and Form 4 notices u/s 8 of the IBC, indicating uncertainty about the nature of the claim. The issuance of multiple notices u/s 8 does not make the claim payable as an operational debt. The claim raised by the Operational Creditor does not qualify as an operational debt, and hence, the initiation of CIRP u/s 9 against the Corporate Debtor is not justified. The Adjudicating Authority's rejection of the claim through the impugned order is valid and does not warrant interference by the Appellate Tribunal u/s 61 of the IBC. Consequently, the appeal is dismissed.

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Maintainability of an application for initiation of Corporate ...

Claim for Performance Pay Rejected: Not an Operational Debt Under IBC, Appeal Dismissed Due to Ambiguity in Notices.

November 23, 2024

Case Laws IBC AT

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