Tribunal Rules Compulsorily Convertible Debentures Without Repayment Obligations as Equity, Not Debt, Under Bankruptcy Code.

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....The case before the National Company Law Appellate Tribunal in Chennai involved the classification of Compulsorily Convertible Debentures (CCDs) that do not require repayment as either debt or equity for the purpose of admitting claims under the Insolvency and Bankruptcy Code (IBC). The Tribunal referred to the Supreme Court's decision in a similar case where CCDs were treated as equity. The Tribunal noted that CCDs without repayment obligations are akin to equity instruments. As per legal principles, if a debenture does not involve repayment of principal amount and leads to automatic conversion into equity, it is considered an equity instrument. Therefore, the Tribunal upheld the lower court's decision, dismissing the appeal and affirming that the CCDs in question should be treated as equity, following the precedent set by the Supreme Court.....