Stories
Supreme Court Reserves Verdict on CoC's Power to Withdraw Resolution Plan Post-Approval
- •The Supreme Court reserved judgment on whether the NCLT can permit withdrawal of a resolution plan application after CoC approval and submission to the Adjudicating Authority.
- •Indian Bank challenged NCLAT's order, arguing the CoC should reconsider due to changed circumstances, specifically improved solvency of TD Toll Road Pvt Ltd post-COVID-19.
- •Senior Advocate Gopal Sankaranarayanan contended that the NCLT should consider the corporate debtor's improved financial position when reviewing the pending approval application.
- •Senior Advocate Nidhesh Gupta, representing the successful resolution applicant, argued that a CoC-approved plan has binding effect under IBC and cannot be withdrawn or modified before NCLT approval.
- •The Court questioned how creditors would recover dues if the existing plan was abandoned and considered the binding nature of CoC-approved plans and the successful applicant's performance guarantee.
Key Questions Answered
The Supreme Court is examining whether the National Company Law Tribunal can permit the withdrawal of a resolution plan application after the Committee of Creditors has approved it and submitted it to the Adjudicating Authority under the Insolvency and Bankruptcy Code.
Representing Indian Bank, Senior Advocate Gopal Sankaranarayanan argued that circumstances changed because the plan was approved during the COVID-19 pandemic when toll collections were depressed, and the corporate debtor's solvency position subsequently improved substantially.
Senior Advocate Nidhesh Gupta argued that a CoC-approved plan acquires a binding character under the IBC framework and Section 31 does not allow it to remain open to withdrawal or modification by either the CoC or the successful applicant prior to formal approval.
