TY - JOUR AU - Mohan, M P Ram AU - Raj, Vishakha PY - 2020/06/01 Y2 - 2024/03/29 TI - Apartment Buyers as Financial Creditors: Pushing the Conceptual Limits of the Indian Insolvency Regime JF - Columbia Journal of Asian Law JA - CJAL VL - 33 IS - 2 SE - Articles DO - 10.7916/cjal.v33i2.6600 UR - https://journals.library.columbia.edu/index.php/cjal/article/view/6600 SP - 219-263 AB - <p>A unique feature of the Indian insolvency regime is its<br>classification of debt into “operational” and “financial” debt. In<br>Swiss Ribbons v. Union of India, the Supreme Court of India<br>tenaciously upheld the difference between operational and<br>financial creditors and declared this classification constitutionally<br>valid. Last year, the Insolvency and Bankruptcy Code, 2016 (IBC)<br>was amended to include amounts raised from allottees (persons to<br>whom an apartment or plot in a real estate project has been<br>allotted) within the definition of “financial debt,” thus making<br>allottees financial creditors. Though the amendment was passed to<br>empower allottees in India’s real estate sector, it revived a more<br>general discussion on the characteristics of operational and<br>financial creditors.<br>This paper posits that the amendment was enacted at the<br>cost of stretching the definition of “financial creditor” beyond its<br>conceptual limit and interfering with the IBC’s insolvency<br>resolution mechanism. We use the United States’ and the United<br>Kingdom’s insolvency regimes as a point of reference for<br>ascertaining the role of creditors in insolvency proceedings and<br>whether operationalizing the insolvency regime to solve problems<br>in a particular sector is justified.</p> ER -