The Supreme Court has held that the threshold for establishing default under Section 7 of the Insolvency and Bankruptcy Code (IBC) at the stage of admission of an insolvency petition is a summary, prima facie one, to be determined on the preponderance of probabilities from the documentary material on record.
A Bench of Justices Dipankar Datta and Augustine George Masih clarified that the adjudicating authority is required to determine whether a default has occurred, and not undertake a conclusive reconciliation of the exact amount of debt outstanding.
Section 7 of the IBC allows a financial creditor, such as a bank or financial institution, to initiate insolvency proceedings against a corporate debtor when it defaults on repayment of its…