https://www.taxtmi.com/caselaws?id=768756 Cumulative redeemable preference shares allotted in lieu of outstanding receivables were treated as share capital, not financial debt, because the transaction was documented as conversion of an earlier claim into preference share investment. Preference shares under the Companies Act, 2013 do not by themselves create borrowing, and redemption is regulated by section 55, permitting it only from distributable profits or proceeds of a fresh issue. As the corporate debtor had neither declared profits nor issued fresh capital for redemption, the receivable had been converted into capital rather than a debt obligation. On that basis, no default in respect of financial debt was established and a section 7 insolvency application was not maintainable. en-us Wed, 09 Apr 2025 00:00:00 +0530 Thu, 28 Aug 2025 14:39:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=768756 Cumulative redeemable preference shares allotted in lieu of outstanding receivables were treated as share capital, not financial debt, because the transaction was documented as conversion of an earlier claim into preference share investment. Preference shares under the Companies Act, 2013 do not by themselves create borrowing, and redemption is regulated by section 55, permitting it only from distributable profits or proceeds of a fresh issue. As the corporate debtor had neither declared profits nor issued fresh capital for redemption, the receivable had been converted into capital rather than a debt obligation. On that basis, no default in respect of financial debt was established and a section 7 insolvency application was not maintainable. Case-Laws IBC Wed, 09 Apr 2025 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=768756