NCLAT does not uphold differential treatment of secured creditors based on class and charge during liquidation
A three-judge bench of the National Company Law Appellate Tribunal (“NCLAT”) recently set aside a judgment passed by the National Company Law Tribunal, Ahmadabad bench which had held that sub-classification can be maintained inter-se secured creditors in the distribution mechanism adopted in a resolution plan. The NCLAT also held that the inter-se priorities amongst secured creditors will not be valid and will not prevail in distribution of assets under the liquidation waterfall prescribed under the Insolvency and Bankruptcy Code, 2016.
For details of the judgment, please refer to the below document.
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