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Informative

Once Assignment Of Debt Is Declared Illegal, Assignee Loses Its Rights To File Application U/S 7 Of IBC: NCLAT

Update / Judgement Date

22 Aug 2025

Source

Live Law

Author

Team — WCP Legal Desk

Reading Time

1 min read

Corporate Law & GovernanceInsolvency & Bankruptcy Code

The NCLAT has ruled that once an "assignment of debt is declared illegal," the "assignee loses its rights to file an application under Section 7 of the IBC." The tribunal's decision clarifies a key procedural aspect of the IBC. The ruling reinforces the principle that a person cannot file a claim if it is for a debt that is not a valid debt. The court's decision is a crucial reminder to all that they must be diligent in their dealings.