The NCLT has admitted a plea under Section 7 against SWAL Limited, affirming that inter-corporate loans with interest are classified as financial debts under the IBC.
Interest-Bearing Inter-Corporate Loan Constitutes Financial Debt under IBC
The National Company Law Tribunal (NCLT) has admitted a Section 7 application against SWAL Limited, categorizing an interest-bearing inter-corporate loan as financial debt under the Insolvency and Bankruptcy Code (IBC). This marks a significant development in characterizing debts for insolvency proceedings.
The tribunal commenced the Corporate Insolvency Resolution Process (CIRP) and appointed Mr. Neeraj Jain as the Interim Resolution Professional. The ruling clarifies the classification of loans, emphasizing that loans extending beyond repayment terms with associated interest meet criteria for financial indebtedness.
This decision signals to financial and corporate entities regarding the implications of inter-corporate loans in insolvency contexts, urging them to approach such arrangements with increased legal diligence.
Citations
- SWAL Limited (2026) NCLT
