Threshold u/s 4 of IBC should be met at time of Filing of CIRP application: NCLAT

The National Company Law Appellate Tribunal (NCLAT) has clarified a crucial aspect of the Insolvency and Bankruptcy Code (IBC), ruling that the minimum default threshold of Rs 1 crore required to initiate a Corporate Insolvency Resolution Process (CIRP) must be met at the time of filing the application. The tribunal's decision came in a case where the original default amount was below the threshold, but had crossed the limit later due to the accumulation of interest. The NCLAT held that the date of filing the application is the relevant date for determining whether the default amount meets the statutory threshold. This ruling provides certainty and prevents the inclusion of future interest to meet the minimum requirement, ensuring that the insolvency process is triggered only for defaults of a certain magnitude as originally envisaged by the law at the time of initiating the process.