Financial debt under insolvency law may exist without express interest if the transaction has the commercial effect of borrowing.

Funds infused under a memorandum of agreement may qualify as financial debt under the Insolvency and Bankruptcy Code where there is actual disbursal, repayment obligation, and commercial effect of borrowing. The absence of an express interest clause does not by itself prevent classification as financial debt if the overall arrangement is a financing transaction, particularly where the funds are used to revive the corporate debtor's operations and the lender receives commercial benefits such as commission or security-like rights until repayment. On this reasoning, such an arrangement can support financial creditor status for a Section 7 application.

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Issues: Whether the funds infused by the appellant under the memorandum of agreement constituted a financial debt so as to make the appellant a financial creditor entitled to maintain the Section 7 application.

Analysis: The definition of financial debt under the Insolvency and Bankruptcy Code requires disbursal against consideration for the time value of money, and the inclusive part of the definition extends to transactions having the commercial effect of borrowing. The agreement showed actual disbursal of funds and supply of raw material for reviving the corporate debtor's operations, with the amounts being fully refundable and the appellant entitled to commission and lien over assets and shares until repayment. The absence of an express interest clause did not exclude the transaction from being a financial debt, since interest-free funding can still qualify where the overall transaction carries the commercial effect of borrowing. On a holistic reading, the arrangement was not a mere business understanding but a financing transaction with repayment obligation.

Conclusion: The infusion of funds amounted to financial debt and the appellant was a financial creditor. The rejection of the Section 7 application on that ground was erroneous and the appellant succeeded on this issue.

Ratio Decidendi: A transaction that involves disbursal of funds for reviving a corporate debtor's business, with repayment obligations and attendant commercial benefits to the lender, can constitute financial debt even without an express interest clause if it has the commercial effect of borrowing.

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