The Supreme Court on Tuesday (October 27) held that a lender and debenture holder exercising pervasive influence over a corporate debtor’s management and policy decisions can be treated as a related party under the Insolvency and Bankruptcy Code, 2016 (IBC) and excluded from participating in the Committee of Creditors (CoC).
“The requirement would not be to the extent of being in the driving seat, but a role of navigation would suffice, in determining policy and channelising business interests.”, observed a bench of Justice JB Pardiwala and Justice K. Vinod Chandran, while dismissing the appeal filed by a debenture holder for inclusion in the CoC, after finding that it to be a related party under Section 24(5)(m)(i) of the IBC,…