Incorporated with the objective of promoting maximization of value of assets in a time bound manner, the Insolvency and Bankruptcy Code (hereinafter referred to as “IBC”) works towards effective protection to honest creditors against unscrupulous debtors who may misuse insolvency to evade of their liabilities. The conducive and efficacious implementation of the IBC has instilled confidence in the creditors for a systematic and speedy reform. The remedy under the IBC is also available to the unpaid employees of the debtor which is now being recognized judicially as well.

Recently, the National Company Law Tribunal admitted a case for non-payment of salaries to the employees under the IBC. As per the provisions of the IBC, employees are considered to be the operational creditors in respect of the pending salaries which would be computed as dues on the account of the employer.

The employees of a number of companies including Zeal Global projects, Applied Electromagnetics Pvt. Ltd. and Phadnis Properties have initiated recovery proceedings under the IBC. The time limit of 180 days for resolution of the proceedings helps in the quick disposal and reposes faith in justice.

With the advent of the IBC, there is an expectation of the settlement of the issues regarding payment of unpaid salaries to the innocent and sincere employees who delivered their services during the tenure of their employment when the employer may seek an escape towards his duties under the shield of insolvency.