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The National Company Law Appellate Tribunal (NCLAT) on Wednesday said that insolvency proceedings cannot be triggered on the basis of debt which has been converted into capital such as equity of a company.
The appellate tribunal also said that any investment cannot be "financial debt" and the provisions of Section 7 of the Insolvency & Bankruptcy Code provide for initiation of CIRP by a financial creditor only and that too, if there is "debt" and "default".
CIRP is Corporate Insolvency Resolution Process.
The observations from a two-member NCLAT bench came as it upheld an order of the National Company Law Tribunal (NCLT), which
