Operational Creditors under the IBC: Unequal Footing or Justified Differentiation?"

The Insolvency and Bankruptcy Code (IBC), 2016 brought significant reforms to India’s insolvency regime by introducing a time-bound resolution process and clearly categorizing creditors into financial and operational. However, this classification has raised critical concerns regarding the differential treatment of operational creditors in the corporate insolvency resolution process (CIRP). While financial creditors enjoy voting rights in the Committee of Creditors (CoC), operational creditors are often excluded from key decision-making, leading to questions about fairness and equity. This paper critically examines whether the differential treatment of operational creditors under the IBC is constitutionally valid, economically justified, and legally sustainable. The study explores judicial interpretations, particularly landmark rulings like Swiss Ribbons v. Union of India, and evaluates the rationale behind such distinction. It also analyzes whether operational creditors are adequately protected within the existing framework, and what reforms, if any, are needed to ensure a more balanced approach. Through doctrinal analysis, stakeholder perspectives, and a review of policy documents and case laws, this paper aims to contribute to the ongoing discourse on creditor rights and insolvency law reform in India.