Main objective IBC 2016 is reorganisation and resolution not recovery

Last updated: 15 August 2022
Quick Summary
The National Company Law Appellate Tribunal (NCLAT) upheld the dismissal of a petition filed under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016. The tribunal ruled that the IBC's primary aim is reorganisation and resolution, not debt recovery, especially for solvent companies that are going concerns and provide employment. The petition was dismissed because the demand notice was improperly issued and the company was a solvent MSME, making insolvency proceedings inappropriate for recovering a small debt.

Court :
NCLAT New Delhi

Brief :
The Hon'ble NCLAT New Delhi Bench upheld dismissal of petition filed under Section 9 of IBC,2016 on the grounds that Corporate Debtor being a solvent company and its status is MSME. The Corporate Debtor is providing employment to various persons and generating revenue. In such cases where amount due is small the question of “Reorganisation or Resolution” of Company does not arise.

Citation :
NCLAT, Company Appeal (AT) (Ins) No. 968 of 2020.

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