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IBC: Should We Worry About Collusive Insolvencies?

A corporate debtor’s incentives to collude with a creditor to deliberately trigger bankruptcy are very low, writes Bhargavi Zaveri

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In a recent order, the National Company Law Appellate Tribunal upheld an order of the NCLT dismissing an insolvency petition under the Insolvency and Bankruptcy Code on the ground of suspected collusion between the creditor and the debtor. This order presents a strange outcome. The tribunal, the creditor who filed the insolvency petition, and the debtor agree that the debtor defaulted to the petitioning financial creditor. The tribun...
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