High Court: Loan Defaulters' IBC Misuse Threatens Economic Stability

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Loan Defaulters Misusing IBC to Evade Creditors, Impacting Economy: HC

L&T Finance | The stock was an outperformer in 2025 and Nomura expects the stock to rise another 19.5% from current levels. Its "buy" rating comes with a price target of ₹325. Nomura's note stated that L&T Finance has nearly achieved its objectives highlighted in "Lakshya 2026" which is to increase its retail loan mix to 95% and a 25% CAGR in retail loans in 2026. It also said that L&T Finance has built commendable AI engines for underwriting and monitoring and it is already showing early signs of improvement in its asset quality. Macro events impacting rural customer base, disruption in AI engines and changes in management team driving AI are key downside risks.

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CNBC TV18•19-03-2026, 16:40

Loan Defaulters Misusing IBC to Evade Creditors, Impacting Economy: HC

•Bombay High Court criticizes loan defaulters and guarantors for misusing IBC provisions to trigger moratoriums and gain immunity.
•Court states this practice frustrates IBC's objective, paralyzes lawful steps by secured creditors, and adversely affects the economy.
•Noted a "disturbing trend" where chronic defaulters use IBC to thwart secured creditors and auction purchasers under the Securitisation Act.
•Defaulters initiate collusive IBC proceedings after auction purchasers emerge, bringing all Securitisation Act steps to a standstill.
•HC quashed DRT order that stalled property sale based on a moratorium, as the sale certificate was issued before IBC proceedings.

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