The financial creditor in simple terms is the institution that provided money to the corporate entity in the form of loans, bonds etc.
Three important types of financial credit
- Money borrowed against payment of interest
- Any amount raised by acceptance under any acceptance credit facility, dematerialised form etc.
- Any amount raised through the issue of bonds, notes, debentures, loan stock or any similar instrument.
The Supreme Court in a remarkable verdict clarified that in the case of housing projects, the homebuyers should be treated as financial creditors. The implication is that their obligation will be serviced out first during the resolution implementation through liquidation etc.