Section 9 IBC Applications by Operational Creditors: Emerging Trends in NCLT Practice
The Insolvency and Bankruptcy Code, 2016 (“IBC”) enables operational creditors to initiate corporate insolvency resolution proceedings under Section 9 upon occurrence of a default. While the statutory framework remains unchanged, recent admission-stage practices—particularly at the Delhi Bench of the NCLT—signal a clear shift toward enhanced procedural and bona fide scrutiny . 1. Affidavit Affirming Absence of Collusion: A recurring direction from the Tribunal is the filing of a specific affidavit affirming that the Section 9 petition is not collusive . This affidavit typically requires the applicant to declare that: The petition is not filed in coordination with the corporate debtor, its promoters, directors, or related parties; The insolvency process is not being triggered to achieve an indirect or strategic objective, including management change, regulatory arbitrage, or shielding the corporate debtor from other proceedings. This concern is no longer theoretical. In Hyt...