Unregistered debt assignment and related-party status can block claim admission and CoC participation under insolvency law

An assignee's claim based on a debt assignment executed during CIRP may be refused where the assignment deed is unregistered when the claim is presented for admission. The Tribunal held that, even if registration time may remain available under the Registration Act, an unregistered deed cannot be acted upon to recognise the assignee's claim at that stage. It also held that an assignee steps into the shoes of the assignor, so if the assignor has already been found to be a related party of the corporate debtor, the assignee cannot be treated as a non-related financial creditor for Committee of Creditors participation.

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Issues: Whether the applicant was entitled to have its assigned claim admitted and to be recognised as a financial creditor with inclusion in the Committee of Creditors, despite the assignment deed being unregistered at the time of filing and the assignor having already been held to be a related party.

Analysis: The application was founded on an assignment of debt executed during the CIRP and presented to the resolution professional for admission of claim and CoC participation. The claim was rejected on the grounds that the assignment deed was not registered when the claim was filed, that the transaction was surrounded by suspicious circumstances, and that the assignor had already been determined to be a related party of the corporate debtor. The Tribunal held that although time may be available for registration under the Registration Act, an unregistered assignment deed could not be acted upon for admission of the claim at the time it was presented. It further held that an assignee steps into the shoes of the assignor, and where the assignor is a related party, the assignee also cannot be treated as eligible for CoC participation as a non-related financial creditor.

Conclusion: The applicant was not entitled to admission of its claim on the basis of the unregistered assignment deed and was not eligible to be included in the Committee of Creditors as a non-related financial creditor.

Ratio Decidendi: A claim based on an assignment deed that is unregistered at the time of presentation may be rejected, and an assignee of a debt from a related party inherits that related-party character for the purpose of CoC eligibility.

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