In Brief
Phoenix ARC held a pledge of shares granted by Doshion Veolia (the corporate debtor) as collateral security for a loan advanced to Doshion Limited (the parent company). When Doshion Veolia entered insolvency, Phoenix ARC claimed to be a financial creditor. The Supreme Court held that a person possessing only a security interest in a corporate debtor's assets is not a financial creditor under the IBC. The pledge of shares, though creating a secured creditor status, lacks the essential element of financial debt—a direct disbursal by the creditor to the debtor in consideration of time value of money. A pledge is not a guarantee. Without a personal liability undertaken by the corporate debtor to repay the loan, the appellant remains only a secured creditor, not a financial creditor.
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