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What is operational debt and who can be operational creditor
08-Jun-2023 (In Civil Law)
Dear sir, I am practising lawyer of supreme court, two days back I sent notice to a automobile company on behalf of a vehicle dealer regarding operational debt I want to be clear what can be operational debt as my client had spent nearly one crore to maintain standard of company to run dealership and within two year of time company announced its winding ,sir the money spent on instruction of company to built and run the dealership can be claim as operational debt by the dealer under ibc 2016.the bs3 vehicles bought by dealer which was banned by supreme court for further sale can be claim as debt by dealer Salary given to employees by dealer for marketing company product can be claimed by dealer as operational debt? Kindly enlighten me on these issues Regards
An operational creditor is defined under Section 5(20) of the IBC to mean
"any person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred".
In order to ascertain whether a person would fall within the definition of an operational creditor, the debt owed to such a person must fall within the definition of an operational debt as defined under Section 5(21) of the IBC.
An operational debt is defined under section 5(21) of the IBC (Insolvency and Bankruptcy Code) to mean:
"a claim in respect of the provisions of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority".
For further clarity do read Macquarie Bank Limited v. Shilpi Cable Technologies Limited (Supreme Court), Civil Appeal No. 15135 of 2017, decided on December 15, 2017
Warmly
Ambanshu Sahni
Advocate
"any person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred".
In order to ascertain whether a person would fall within the definition of an operational creditor, the debt owed to such a person must fall within the definition of an operational debt as defined under Section 5(21) of the IBC.
An operational debt is defined under section 5(21) of the IBC (Insolvency and Bankruptcy Code) to mean:
"a claim in respect of the provisions of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority".
For further clarity do read Macquarie Bank Limited v. Shilpi Cable Technologies Limited (Supreme Court), Civil Appeal No. 15135 of 2017, decided on December 15, 2017
Warmly
Ambanshu Sahni
Advocate
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