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 are not less than ten per cent of the debt (Section 24(3)(c)–(4)).

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 are not less than ten per cent of the debt. 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.