COMMITTEE OF CREDITOR & THEORY OF VALUE MAXIMIZATION: THE CRY STORY OF RELATED PARTY RESOLVED
Shubham Budhiraja BACKGROUND The IBC recognizes that for the success of an insolvency regime, the real nature of the transactions has to be unearthed in order to prevent any person from taking undue benefit of its provisions to the detriment of the rights of legitimate creditors. RELATED PARTY UNDER IBC The expression ‘related party’ is defined in Section 5(24) in relation to a corporate debtor. Section 5(24A) provides a corresponding definition in relation to an individual. The definition describes a commutative relationship , meaning that X can be a related party of Y, if either X is related to Y, or Y is related to X. The definition of ‘related party’ under the IBC is significantly broad. The intention of the legislature in adopting such a broad definition was to capture all kinds of interrelationships between the financial creditor and the corporate debtor The term ‘related party’ has also been defined by Parliament in the Companies Act, 2013 for all corporations. The definition