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Informative

Breach of Settlement Agreement Does Not Bar Financial Creditors from Filing Application u/s 7 of IBC: NCLAT

Update / Judgement Date

09 Apr 2025

Source

Taxscan

Author

Team — WCP Legal Desk

Reading Time

1 min read

Insolvency & Bankruptcy Code

The NCLAT ruled that a breach of a settlement agreement does not bar financial creditors from filing an application under Section 7 of the IBC. The appellate tribunal clarified that if a settlement agreement between a financial creditor and a corporate debtor is breached, the financial creditor retains the right to initiate corporate insolvency resolution process under Section 7 of the IBC based on the original debt.