Secured Creditor Is Liable To Pay Liquidator’s Fees Under Rule 21A Of IBC Liquidation Regulations: NCLAT

The National Company Law Appellate Tribunal (NCLAT) ruled that secured creditors are liable to pay the liquidator’s fees under Rule 21A of the Insolvency and Bankruptcy Code (IBC) Liquidation Regulations. The case involved a secured creditor disputing their responsibility to bear the liquidation costs, arguing that the liquidation was not due to their actions. However, the NCLAT held that under the provisions of the IBC, secured creditors are liable to contribute to the liquidation process, including the fees of the liquidator. This ruling clarifies the financial obligations of secured creditors in the liquidation process and reinforces that creditors cannot avoid these liabilities simply by claiming non-involvement in the liquidation proceedings. The decision helps ensure that the liquidation process is properly funded, facilitating a smooth resolution under the IBC.