When a debtor stops paying, Indian creditors often head to the Debt Recovery Tribunal (DRT) or file an insolvency petition before the National Company Law Tribunal (NCLT). Both routes work, but both take time. Selling the debt lets you exit early while the case is pending.
DRT recovery under the RDDBFI Act
The DRT, constituted under the Recovery of Debts and Bankruptcy Act (RDDBFI), 1993, handles recovery applications above the statutory threshold, mainly for banks and financial institutions. A debt already before the DRT, or backed by a recovery certificate, removes much of the legal risk for a buyer.
NCLT and the Insolvency and Bankruptcy Code
Under the Insolvency and Bankruptcy Code (IBC), 2016, an operational or financial creditor can file before the NCLT to trigger a corporate insolvency resolution process. A pending IBC petition, or admission of the debtor into resolution, changes the value of a receivable sharply.
A debt tied to an admitted IBC case is essentially a claim in a collective process: buyers value it on expected recovery from the resolution plan or liquidation waterfall, not on the face value.
How proceedings affect the sale price
- Decree or recovery certificate: only collection risk remains, so the price rises.
- Pending DRT application: the buyer steps into the proceedings on assignment.
- Admitted IBC case: priced on the debtor's asset pool and the creditor class.
Sell and litigate at the same time
You do not have to choose. You can list the debt for sale while the DRT or NCLT case continues. If you sell mid-way, the buyer takes over the claim; if the case advances in your favour, the sale value goes up.
You can review NCLT procedure on the official NCLT portal.
Where to find the right buyer
Debtalia is a marketplace that connects sellers directly with buyers, including funds and law firms that specialise in DRT and IBC claims. Listings are anonymous and there is no commission on the sale, so the full agreed price is yours.
