Repeated Section 9 IBC Applications Indicate Misuse Of IBC To “Arm-Twist” Solvent Company For Extortion: NCLAT

The National Company Law Appellate Tribunal (NCLAT) observed that repeated applications under Section 9 of the Insolvency and Bankruptcy Code (IBC) could indicate misuse of the code for coercive purposes. In this case, the tribunal found that repeated filings by creditors appeared to be attempts to pressure or extort settlements from the solvent company rather than genuine insolvency claims. The tribunal's decision underscores the need for genuine insolvency petitions and cautions against using the IBC as a tool for leverage or extortion, reinforcing the code's purpose of addressing genuine insolvency issues.