ABC Construction Ltd. has been involved in construction of residential apartments. Two years ago, the company accepted ₹500 Crores from 2000 individuals with a promise to deliver apartments of various sizes in a resident

Section 5(7) of Insolvency and Bankruptcy Code, 2016 (IBC) defines a financial creditor inter-alia as any person to whom financial debt is owed. According to Explanation to Section 5(8)(f), any amount raised from an allottees/depositors under a real estate project shall be deemed to be an amount having the commercial effect of borrowing. Section 7 of IBC provides that a financial creditor either by himself or jointly with other financial creditors may file an application for initiating Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor before the Adjudicating Authority, when a default has occurred. Hence, the allottees/depositors can invoke the provisions of Insolvency and Bankruptcy Code, 2016 for initiating CIRP against ABC Construction Ltd.