Money Raised out of Optional Convertible Debentures Classifiable as Financial Debt u/s 5(8): NCLAT

In a similar case involving the classification of money raised through optional convertible debentures, the NCLAT dismissed IREDA’s appeal, reaffirming that such funds are classified as financial debt under Section 5(8) of the Insolvency and Bankruptcy Code (IBC). The appellate tribunal rejected IREDA’s argument that the funds were not financial debt and clarified that OCDs meet the definition of financial debt. The ruling aligns with the legal framework governing insolvency proceedings, emphasizing that any debt raised through convertible instruments should be classified accordingly. This decision sets a key precedent in determining the classification of funds raised through various financial instruments in the insolvency process.