# In the matter of Al- Saqib Exports Private Limited COMPANY PETITION IB (IBC) NO. 745 of 2020

> NCLT judgment dated 2023-05-23. Citation: TCN-2023-NCLT-03224. Drip Capital Inc., a financial creditor, filed a Section 7 application under the Insolvency and…

- **Court:** NCLT
- **Order date:** 23 May 2023
- **Citation:** TCN-2023-NCLT-03224
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/al-saqib-exports-private-limited-company-petition-ib-ibc-no-745-of-2020-8060e297

## Summary

### Background

Drip Capital Inc., a financial creditor, filed a Section 7 application under the Insolvency and Bankruptcy Code, 2016, against Al Saqib Exports Private Limited, the corporate debtor, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The application pertains to a default on seven receivables purchased by Drip Capital from Al Saqib Exports on a recourse basis. Drip Capital advanced USD 475,440.00 during July/August 2019, but most of it remained unpaid. The financial creditor sent a demand notice on 2019-11-22 and a legal notice on 2020-01-09 to the corporate debtor.

## Facts

Drip Capital Inc., an offshore company based in Delaware, USA, engaged in factoring business, filed a Section 7 application under the Insolvency and Bankruptcy Code, 2016, against Al Saqib Exports Private Limited, an export company registered in Delhi. The application pertains to a default on seven receivables purchased by Drip Capital from Al Saqib Exports on a recourse basis. Drip Capital advanced USD 475,440.00 during July/August 2019, but most of it remained unpaid by the debtor/consignee beyond the invoice due date. A Receivables Purchase Factoring Agreement (RPFA) was executed between the parties on 2019-03-07. The financial creditor sent a demand notice on 2019-11-22 and a legal notice on 2020-01-09 to the corporate debtor. As of the date of filing the Section 7

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## Issues and analysis

### Issue 1: Whether the application under Section 7 of the …

**Ratio:** Section 7 of the Insolvency and Bankruptcy Code, 2016 allows a financial creditor to

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**Reasoning:** The NCLT considered the submissions of both parties and found that the essential

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**Interpretation:** Section 7 provides a mechanism for financial creditors to recover their dues

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**Application:** The NCLT determined that the debt was a 'financial debt' under Section 5(8)(e)

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## Parties

- **Judges:** P.S.N. P…; BINOD KUMAR…
- **Appellants:** Drip Capit…
- **Respondents:** Al Saqib Exports…; Al Saqib Exports…

## Timeline

- **1996-04-24 — Corporate Debtor…**: Al Saqib Exports Private…
- **2019-03-07 — Receivables Purchase…**: Execution of Receivables Purchase Factoring Agreement (RPFA) between Drip Capital Inc.…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(8) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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