MUMBAI: In what could set a judicial precedent against errant borrowers trying to game the system, the National Company Law Tribunal (NCLT) in a recent order has held that transfer of debt by a related party to a non-related party cannot lead to dilution of voting rights of the financial creditors while the insolvency resolution process is on.
The tribunal was hearing a matter in which state-run lender State Bank of India had challenged the assignment of debt in Fortune Pharma from related to the non-related party which led to dilution of its voting rights from 100% to 55%.
A related party cannot suddenly become a non-related party just because he washes his hands of and hands over the papers to other parties who have no valid reason…
Read the full article at: https://economictimes.indiatimes.com/markets/stocks/news/debt-transfer-wont-curb-creditor-rights/articleshow/61859849.cms
