https://www.taxtmi.com/caselaws?id=753100 The NCLAT Chennai dismissed an appeal regarding treatment of compulsorily convertible debentures (CCDs) under IBC. Following SC precedent in IFCI Limited case, the tribunal held that CCDs without repayment obligation constitute equity instruments, not debt. The debentures automatically converted to equity shares after 10 years with no liability for principal repayment. Under waterfall mechanism, equity holders rank after creditors, meaning appellant would receive nothing. The tribunal applied the test that convertible debentures are debt only if they provide for principal repayment; otherwise they are equity instruments. en-us Wed, 22 May 2024 00:00:00 +0530 Fri, 24 May 2024 12:50:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=753100 The NCLAT Chennai dismissed an appeal regarding treatment of compulsorily convertible debentures (CCDs) under IBC. Following SC precedent in IFCI Limited case, the tribunal held that CCDs without repayment obligation constitute equity instruments, not debt. The debentures automatically converted to equity shares after 10 years with no liability for principal repayment. Under waterfall mechanism, equity holders rank after creditors, meaning appellant would receive nothing. The tribunal applied the test that convertible debentures are debt only if they provide for principal repayment; otherwise they are equity instruments. Case-Laws Insolvency and Bankruptcy Wed, 22 May 2024 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=753100