Insolvency Courts Not a Debt Collector, Rules Tribunal in Celebrity Endorsement Dispute

A recent ruling has drawn a clear boundary between insolvency law and routine commercial disputes, after India’s appellate tribunal rejected an attempt by Bollywood star Akshay Kumar to invoke bankruptcy proceedings against edtech company Cue Learn over unpaid endorsement fees. The decision establishes that insolvency mechanisms cannot be used as a pressure tactic to recover disputed payments arising from performance-based contracts.

The case stemmed from a March 2021 endorsement agreement under which the actor agreed to provide promotional services for up to two days over a two-year period ending in March 2023, for a total fee of ₹8.10 crore plus taxes. Cue Learn paid the first instalment of ₹4.05 crore and used one day of promotional services. The second instalment, also ₹4.05 crore, became contentious when the company did not schedule the second appearance, arguing that payment was tied to actual utilisation of services rather than an automatic due date.

After raising an invoice and receiving no payment, Kumar initiated proceedings under India’s insolvency framework, seeking to classify the unpaid amount as an operational debt. The company countered that no liability had arisen because the contractual condition triggering the second payment had never been fulfilled. Earlier, the National Company Law Tribunal dismissed the plea, citing a “pre-existing dispute,” a finding that the appellate tribunal has now upheld.

In its ruling, the tribunal emphasized that insolvency proceedings are intended only for clear and undisputed defaults. Where a genuine disagreement exists over contract interpretation, the matter falls outside the scope of bankruptcy law. The judgment underscored a key legal distinction between a claim and a debt, noting that while all debts originate as claims, not every contractual claim qualifies as a debt eligible for insolvency action.

Legal experts say the verdict significantly alters the enforcement landscape for celebrity endorsement agreements, many of which tie payments to deliverables, schedules or campaign milestones. Because such arrangements are inherently conditional, they are now far less likely to meet the threshold required to trigger insolvency proceedings, pushing disputes into civil litigation or arbitration instead.

The ruling is expected to prompt celebrities, agencies and brands to rework contract language to reduce ambiguity. Lawyers advise that parties seeking stronger payment protection must draft agreements with unconditional fee obligations, fixed due dates and clearly defined acceptance of services. Without such provisions, payment disagreements will be treated as contractual disputes rather than defaults, limiting access to fast-track legal remedies.

For brands and production houses, the decision provides relief from the threat of insolvency filings being used as leverage during negotiations. While companies remain liable for legitimate dues, they are less exposed to the risk of losing operational control through bankruptcy proceedings when disagreements arise over performance-linked payments.

The judgment is likely to influence the structure of endorsement and appearance contracts across India’s entertainment and advertising industries, encouraging more precise drafting while reinforcing the principle that insolvency law is a tool for resolving genuine financial distress, not a shortcut for settling commercial disagreements.