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The Tax Publishers Insolvency and Bankruptcy Code, 2016--Concept of Financial Creditor Explained by NCLAT, New Delhi T.N. Pandey As per Insolvency and Bankruptcy Code, 2016 financial creditor means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to. In the case of Nikhil Mehta & Sons v. AMR Infrastructure Ltd. 2017 TaxPub (CL) 587 (NCLT-New Del) (2017) 143 SCL 278 (NCLAT-New Del) the issue regarding scope of financial creditor came in question. The NCLAT explained the concept of financial creditor. The learned author discusses the case in detail. 1. Introduction To appreciate the concept of financial creditor under the Insolvency and Bankruptcy Code, 2016 (IB Code, for short, in later discussion), it is necessary to look into the provisions of sections 5(7) and (8) and section 7 of the IB Code, which read as under :-- 5. In this Part, unless the context otherwise requires, (7) financial creditor means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to; (8) financial debt means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes (a) money borrowed against the payment of interest; (b) any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instruments; (d) the amount of any liability in respect of any lease or hire purchase contract, which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as, may be prescribed; (e) receivables sold or discounted, other than any receivables sold on non-recourse basis; (f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account; SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Insolvency and Bankruptcy Code, 2016--Concept of Financial Creditor Explained by NCLAT, New Delhi

T.N. Pandey

As per Insolvency and Bankruptcy Code, 2016 financial creditor means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to. In the case of Nikhil Mehta & Sons v. AMR Infrastructure Ltd. 2017 TaxPub (CL) 587 (NCLT-New Del) (2017) 143 SCL 278 (NCLAT-New Del) the issue regarding scope of financial creditor came in question. The NCLAT explained the concept of financial creditor. The learned author discusses the case in detail.

1. Introduction

To appreciate the concept of financial creditor under the Insolvency and Bankruptcy Code, 2016 (IB Code, for short, in later discussion), it is necessary to look into the provisions of sections 5(7) and (8) and section 7 of the IB Code, which read as under :--

5. In this Part, unless the context otherwise requires,

(7) financial creditor means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to;

(8) financial debt means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes

(a) money borrowed against the payment of interest;

(b) any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent;

(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instruments;

(d) the amount of any liability in respect of any lease or hire purchase contract, which is deemed as a finance or capital lease under the Indian Accounting Standards or such other accounting standards as, may be prescribed;

(e) receivables sold or discounted, other than any receivables sold on non-recourse basis;

(f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing;

(g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account;