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SC: Corporate Debtor Only Offering Security by Pledging Shares Not a Financial Creditor - (04 Feb 2021)


Supreme Court has held that if a corporate debtor has only offered security by pledging shares, without undertaking to discharge the borrower's liability, then the creditor in such a case will not become 'financial creditor' as defined under the Insolvency and Bankruptcy Code, 2016(IBC). The Court has held that such a creditor could be a secured creditor but will not be a financial creditor under the IBC entitled to take part in the insolvency resolution process.


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