The Silent Struggle of Operational Creditors: A Looming Threat to India's Business Growth
In the evolving landscape of the Insolvency and Bankruptcy Code (IBC), operational creditors (OCs) find themselves in a precarious position. Despite contributing significantly to the business ecosystem, OCs are receiving a mere fraction of what they claim in insolvency proceedings. According to the latest IBBI newsletter, OCs received just 0.88% of their claims during liquidation—a startling statistic that raises questions about the fairness and efficacy of the current IBC framework.
The disparity in recovery between operational and financial creditors is stark. While financial creditors enjoy primary claims on assets, OCs, who provide essential goods and services, often end up with minimal recoveries. This imbalance not only undermines the confidence of OCs but also threatens the overall business environment in India.
The need for reform is clear. Shouldn't the IBC be recalibrated to ensure a more equitable distribution of assets, fostering a balanced resolution process? The integrity of India's distressed asset market and the future of MSMEs depend on it.
#InsolvencyLaw #BusinessGrowth #OperationalCreditors #IBCReform #CorporateLaw #LegalPerspective #MSMEs #IndiaEconomy #LegalInsights
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