Challenge to IBC Moratorium Period Rejected, Supreme Court Addresses Creditor Priority.
[ Court Doc ]
Bankruptcy & Insolvency Law >> Business & Commercial Law
The writ petition challenging the constitutional validity of Section 101 of the Insolvency and Bankruptcy Code (IBC), 2016, which sets a 180-day limit for the moratorium period, has been dismissed. The court emphasized that the purpose of the moratorium differs between corporate and individual insolvency, with corporate insolvency focusing on rehabilitation through resolution plans, while individual insolvency serves other objectives.
Although the petition was dismissed, a concern was raised about the possibility of one creditor gaining an advantage over others once the moratorium ends, potentially undermining the insolvency process. A notice on this issue will be issued for a civil appeal, with a returnable date in the week starting 28th April 2025. The petitioner, Mukund Choudhary, is allowed to present this order before the National Company Law Tribunal for further action.
Section 101, INSOLVENCY AND BANKRUPTCY CODE - 2016
INSOLVENCY AND BANKRUPTCY CODE, 2016