Does the IBC discriminate between Financial and Operations Creditors?

The Insolvency and Bankruptcy Code, 2016 is a special act which helps to reorganize the business of corporate debtor. The IBC is a complete code created with an objective to balance the interest of all the stakeholders.

To start with, we have to understand as to who a Financial Creditor and an Operational Creditor is. According to Section 5(7) (1) of IBC, Financial Creditor has been defined as:

"Financial creditor" means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned to. (Ex: Bank Loan)

Financial Debt is defined under Section 5(8)(2) of IBC, Financial Debt means:

Debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes-

(a) Money borrowed against the payment of interest;

(b) Any amount raised by acceptance under any acceptance credit facility;

(c) Any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; etc

According to Section 5(20)(3) under IBC, Operational Creditor is:

"Operational creditor" means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. (Ex: Supplier outstanding credit, Workmen dues)

Operational Debt is defined under Section 5(21)(4) of IBC, Operational Debt means:

"Operational debt" means a claim in respect of -