Operational Creditor

IBC, 2016 — Section 5(20); Section 9

Under the IBC, a person to whom an "operational debt" (arising from supply of goods, services, employment, or government dues) is owed. Operational creditors can trigger CIRP by filing under Section 9 of the IBC after issuing a 10-day demand notice. They are not members of the CoC but can attend CoC meetings without voting rights if their aggregate dues exceed 10% of total debt.

For a supplier, contractor or service provider chasing an unpaid invoice, operational-creditor status under the IBC is a powerful pressure tool but a weak governance one. In practice the operational creditor triggers CIRP by serving a Section 8 demand notice and, if the debt is undisputed and unpaid after ten days, filing under Section 9. The decisive vulnerability is the "pre-existing dispute": if the corporate debtor can show a genuine dispute raised before the demand notice, the petition is liable to be rejected, so quality of the underlying documentation matters. Even when admitted, the operational creditor does not get a Committee of Creditors vote and can attend only if aggregate operational dues cross the ten-percent threshold. So the real value of the Section 9 route is leverage to extract payment before admission. Well-advised operational creditors ensure the debt is clearly due, documented, and free of any pre-existing dispute before issuing the Section 8 notice.