Pledged Shares Held By Corporate Debtor In Subsidiary Are Its Assets, Can't Be Invoked During CIRP Due To Moratorium: NCLT Mumbai

The NCLT (National Company Law Tribunal) Mumbai bench has held that "pledged shares held by a corporate debtor in a subsidiary are its assets and cannot be invoked during CIRP due to moratorium under Section 14 of IBC." The tribunal clarified that even if shares of a subsidiary are pledged by the corporate debtor, they remain assets of the corporate debtor. Therefore, during the Corporate Insolvency Resolution Process (CIRP), the moratorium under Section 14 of the IBC prohibits the pledgee from invoking or enforcing the security interest over these pledged shares, safeguarding the corporate debtor's assets during the insolvency period.