The issue came into focus after Bollywood actor Akshay Kumar Bhatia approached an insolvency court to recover dues from Cue Learn, an edtech company. The case raised important questions about whether the Insolvency and Bankruptcy Code (IBC) can be used as a debt-recovery tool in commercial endorsement disputes.
mint explains the NCLAT ruling and its long-term impact on celebrity brand contracts.
What triggered the dispute?
The case arose from an endorsement agreement signed in March 2021 between Akshay Kumar and Cue Learn. Under the deal, Kumar agreed to provide promotional services for up to two days over a two-year period ending March 2023. The total fee was ₹8.10 crore plus taxes, payable in two instalments.
Cue Learn paid the first ₹4.05 crore in March 2021, and the actor’s services were used for one day. The second installment of ₹4.05 crore was due by April 2022. However, since the second day was never scheduled, the company did not make the second payment.
In April 2022, Kumar raised an invoice for the balance amount. After receiving no response, he issued a demand notice under the IBC in May 2022. Cue Learn replied that the second payment was linked to the use of his services for another day and since no such day was scheduled, no payment obligation arose.
In June 2022, Kumar filed a petition under Section 9 of the IBC. In January 2025, the Delhi bench of the National Company Law Tribunal (NCLT) dismissed the plea, holding that there was a pre-existing dispute over the interpretation of the contract. Kumar then appealed to the NCLAT.
Why did the NCLAT reject the plea?
NCLAT upheld the order of the NCLT, rejecting Akshay Kumar’s insolvency plea. It said insolvency proceedings can begin only when the debt and default are clear and undisputed. If there is a genuine disagreement between the parties before the insolvency notice is issued, insolvency cannot be triggered.
The main issue was whether the second payment of ₹4.05 crore was automatically due under the contract or whether it depended on the company actually using the actor’s services for a second day. Akshay argued the payment was due on a fixed date. Cue Learn argued it was linked to performance and since the second day was never used, no payment was due.
The appellate tribunal found that there was a genuine disagreement about how the contract should be understood. The key question was whether the second payment had to be made automatically, or only if the actor actually provided services for a second day. Since both sides had different but reasonable interpretations of the contract, the tribunal said there was a real dispute already in existence before the insolvency case was filed.
The court also drew a clear distinction between a claim and a debt, noting that while every debt is a claim, not every claim qualifies as a debt under the IBC.
The NCLAT also clarified that even if the matter amounts to a breach of contract, the proper remedy is approaching a civil court or undergoing arbitration. Insolvency law cannot be used as a shortcut to recover disputed contractual payments, it said.
What does the ruling mean for celebrities?
Legal experts said the decision closes the insolvency route for most performance-linked endorsement disputes. Raheel Patel, partner at Gandhi Law Associates, said the ruling “squarely closes the door on celebrities using insolvency as a pressure tactic for endorsement or appearance fees”. Once payment is contingent on performance, scheduling, deliverables or contract interpretation, it ceases to be an operational debt under the IBC, he added.
Amit Tungare, managing partner at Asahi Legal, noted that most endorsement contracts are reciprocal, with payments tied to milestones or performance days. “As long as a brand can raise a non-spurious argument about service interpretation or scheduling, it can effectively shield itself from insolvency proceedings,” he said.
What options do celebrities have now?
Ankit Rajgarhia, designate partner at Bahuguna Law Associates, said that if celebrities want to keep insolvency as a legal option in future disputes, contracts must clearly spell out binding and unconditional payment terms. “In order to maintain insolvency as an option, the contract must specify binding, unconditional payment requirements with determinable deadlines,” he said.
According to Rajgarhia, payments should become due on specific dates regardless of performance conditions. Structuring fees as clearly recognized written debts reduces the room for interpretation disputes. He also suggested including acceptance certificates once obligations are completed, and limiting the grounds on which brands can withhold payment to strengthen enforceability.
Experts also suggested that celebrities include non-refundable signing bonuses, fix payments to clear dates rather than events, and add clauses that make delayed payments a definite debt with limited grounds for withholding. If insolvency is not available, they can recover dues through civil suits or arbitration, or seek interim relief such as attachment before judgment.
What does this mean for brands?
Lawyers said the ruling gives brands and production houses slightly more bargaining power – not because companies can now default freely, but because they are insulated from the immediate threat of facing insolvency proceedings as a recovery shortcut.
“The IBC was a powerful stick because the threat of losing control of a company often forced brands to settle quickly,” Tungare said. “With this threat removed from service-linked disputes, brands now have the upper hand. They can withhold payment and force the celebrity into arbitration, knowing that the fast-track insolvency route is blocked by the mere existence of a plausible dispute.”
