Claims of creditors are above government dues under IBC: SC

The Supreme Court (SC), while dealing with a case relating to settlement of electricity charges dues, involving a company undergoing liquidation under Insolvency and Bankruptcy Code, 2016 (IBC), has held that the creditors under IBC are entitled to have their debts repaid first, before dues payable to the State or the Central governments are settled. The SC, while emphasizing on ‘waterfall mechanism’ given under Section 53 of IBC, observed that the dues payable to creditors under the IBC stand on a higher footing than the electricity dues payable under the Electricity Act, 2003.