Financial Creditors Proceeding With Application U/S 7 Only As A Recovery Measure Is Not The Objective Of IBC: NCLAT

NCLAT's Principal Bench in New Delhi stated that financial creditors proceeding with a Section 7 application under IBC is not for recovery measures but for the resolution of insolvency. Section 7 allows financial creditors to initiate CIRP against a corporate debtor. The tribunal clarified that the primary objective of the IBC is to find a resolution for a financially distressed company, which may involve restructuring or liquidation, rather than simply acting as a debt recovery mechanism for individual creditors.