Relief for biz as bankruptcy cases by vendors decline

Bankruptcy cases initiated by operational creditors drop; those by financial creditors rise

- Gireesh Chandra Prasad

123 operational creditors' cases in NCLT in Sep qtr

84 operational creditors' cases in NCLT in Dec qtr

Instances of vendors and suppliers arm-twisting their clients to try and recover dues using the bankruptcy code as a tool is in sharp decline, showed official data.

Information available from the Insolvency and Bankruptcy Board of India (IBBI), the rule maker, showed that there is a 33% fall in the admission of bankruptcy petitions filed by operational creditors in the December quarter compared with the previous three months, while there is a matching increase in the admission of cases filed by financial creditors like banks.

The shift in the trend comes after both tribunals and the Supreme Court drove home the point in various cases that in spite of payment defaults, businesses could otherwise be solvent, a factor they said ought to be kept in mind while admitting cases.