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Financial Debt Time Value of Money Is A Necessary Condition. Here in The

Ted Airways has petitioned that the application to initiate a corporate insolvency resolution process (CIRP) under section 7 of the Insolvency and Bankruptcy Code (IBC) is not maintainable. Ted Airways contends that Rs. 1000 crores claimed as financial debt and Rs. 400 crores as operational debt by the respondents do not qualify as legitimate debt under the IBC. Further, Rs. 1000 crores was not related to principal or interest and no disbursement was made based on time value of money, so it does not meet the definition of financial debt. Therefore, the CIRP cannot be initiated based on the respondents' claim.

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Ashhab Khan
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35 views1 page

Financial Debt Time Value of Money Is A Necessary Condition. Here in The

Ted Airways has petitioned that the application to initiate a corporate insolvency resolution process (CIRP) under section 7 of the Insolvency and Bankruptcy Code (IBC) is not maintainable. Ted Airways contends that Rs. 1000 crores claimed as financial debt and Rs. 400 crores as operational debt by the respondents do not qualify as legitimate debt under the IBC. Further, Rs. 1000 crores was not related to principal or interest and no disbursement was made based on time value of money, so it does not meet the definition of financial debt. Therefore, the CIRP cannot be initiated based on the respondents' claim.

Uploaded by

Ashhab Khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.1.1.

The petitioners Ted Airways have submitted that the application is not
maintainable under section 7 of the IBC. The petitioners contend that 1000
crores (financial debt) and 400 crores (operational debt) represents an
illegitimate claim and cannot be characterised as either financial or
operational debt under the provisions of the Code. For a debt to be a
financial debt time value of money is a necessary condition. Here in the
present case the respondents had no time value of money involved as the
amount claimed which was 1000 crores had no relation with the principal
amount or interest, also no disbursement was made against the consideration
of time value of money for 1000 crores and hence it was not a legitimate
claim and could not be classified under either and hence the CIRP cannot be
initiated under section 7 of the code. It is also submitted that the amount
claimed here does not come under the definition of commercial effect of
borrowing. Therefore, in the light of the submissions and various case laws it
may be said that the claim made by the respondents is mala fide and hence
may be dismissed.

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