In Brief
EPC Constructions India Limited, as liquidator of a company formerly known as Essar Projects India Limited, filed to initiate insolvency against Matix Fertilizers and Chemicals Limited. EPC held cumulative redeemable preference shares issued by Matix in 2015 following conversion of contractual receivables. After the redemption period expired without payment, EPC sought insolvency proceedings. The Supreme Court dismissed the appeal, holding that preference shareholders are not financial creditors under the IBC. Preference shares constitute share capital, not financial debt, as they lack the essential element of 'time value of money' required by Section 5(8) of the IBC. The Court emphasized that conversion of debt into shares effects an extinguishment of the earlier liability, and redemption is contingent on available profits under company law. The IBC is a resolution mechanism, not a debt recovery tool.
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