Operational Debt Can't Be Converted Into Financial Debt By Execution Of Subsequent Agreement Between Parties: NCLT New Delhi

The NCLT (National Company Law Tribunal), New Delhi, has ruled that "operational debt can't be converted into financial debt by execution of subsequent agreement between parties." This decision upholds the fundamental distinction between operational and financial creditors under the Insolvency and Bankruptcy Code (IBC). An agreement entered into after the debt's initial characterization cannot reclassify it to gain a different status in the insolvency process. This prevents circumvention of the IBC's hierarchy of creditors and ensures fair treatment in resolution and liquidation.