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Is IBC unfair to operational creditors?

Any decision to change the system should be based on developed theory and firm evidence

Topics
Insolvency and Bankruptcy Code | IBC

Anthony Casey & Bhargavi Zaveri 



Anthony Casey & Bhargavi Zaveri

A key feature of the (IBC), 2016, is that operational creditors — which include employees, suppliers, and consumers — do not participate in the voting process that determines a debtor corporation’s future. The explicit exclusion of this group of creditors from bankruptcy negotiations is unique to Indian law, and has led to concerns about their equal and equitable treatment. These concerns have spawned legislative and regulatory amendments and ad-hoc judicial pronouncements seeking to protect operational creditors. Many worry that without a say in the resolution process, these creditors will get a raw deal. But theory and evidence do not support this.

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First Published: Wed, August 07 2019. 00:31 IST

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