According to the NCLAT, interest liability acknowledged by the corporate debtor on inter-corporate deposits (ICDs) must be considered part of the financial debt when assessing statutory default thresholds under the IBC.
NCLAT Clarifies Treatment of ICD Interest Liabilities
The National Company Law Appellate Tribunal (NCLAT) has ruled that interest on inter-corporate deposits (ICDs), when acknowledged as a liability by the corporate debtor, should be included in the classification of financial debt. This ruling holds particular importance for the assessment of statutory default thresholds under the Insolvency and Bankruptcy Code (IBC).
The NCLAT underscored that recognizing an interest liability constitutes an acknowledgment of debt which cannot be excluded from the financial debt determination process. This aligns with the overarching principles of transparency and accountability in corporate borrowing.
This ruling serves as a critical reminder to practitioners in insolvency matters regarding the comprehensive nature of financial debt assessments. Lawyers must ensure that all acknowledged liabilities are duly captured, as neglecting to account for interest on ICDs could lead to erroneous conclusions regarding a corporate debtor's financial condition.
Citations
- Case Name (2026) NCLAT Order
