The CoC has challenged higher payout to StanChart
and OCs, which have opposed the latest IBC amendments giving preference to financial creditors over operational ones. Other changes made to the IBC, such as the extension of the corporate insolvency resolution period to 330 days from 270 days, have also been challenged before the court.
During a hearing in August, the SC had observed that if the law allowed banks to decide that while they would take haircuts, they could give nothing to the operational creditor, “it was bad law”.
“If this is not addressed even in the amendments, it is a major lacuna. The amendments, instead of addressing the issue, aggravate it,” the court had then said. The financial creditors to Essar Steel
had then tried to justify the latest amendments made to the IBC by claiming that the difference between them and the OCs was that they were secured lenders as opposed to the latter. The court had, however, observed that as there was “no monopoly” of any operational creditor, it was possible that a new management could switch to another service provider instead of the old one.