SC holds a Pledge Absent any Undertaking to Discharge Liability is not a ‘Financial Debt’

The Supreme Court in the case of Phoenix Arc Pvt. Ltd. v. Ketulbhai Ramubhai Patel[1], has held that if an entity has merely offered security by pledging shares, without undertaking to discharge the liability of the borrower, then the creditor will not qualify as a ‘financial creditor’ under the IBC.

[1] Phoenix Arc Pvt. Ltd. v. Ketulbhai Ramubhai Patel, 2021 SCC OnLine SC 54.

Published In:Inter Alia - Quarterly Edition - March 2021 [ English Chinese japanese ]
Date: March 31, 2021