Supreme Court held that the Committee of Creditors cannot withdraw an approved resolution plan merely because the corporate debtor's financial position has improved.
SC: CoC Cannot Withdraw Approved Resolution Plan Post-Approval on Grounds of Improved Finances
The Supreme Court has ruled that a Committee of Creditors (CoC) cannot withdraw an approved resolution plan after its sanction by the Adjudicating Authority solely on the ground that the financial position of the corporate debtor has improved during the pendency of the CIRP. The judgment clarifies that finality attaches to a resolution plan once approved by the CoC and confirmed by the NCLT.
The Court stressed that the IBC regime prioritizes speed, certainty, and enforceability of resolution outcomes. Permitting withdrawal based on speculative financial upticks would undermine the objectives of time-bound resolution under Section 12(1) of the IBC. The Court quoted:
“The sanctity of the resolution process cannot be sacrificed at the altar of opportunistic reconsideration.”
This decision strengthens investor confidence in the stability of approved resolution plans. Legal practitioners must now advise CoCs that post-approval changes in financial condition do not constitute a valid ground for withdrawal or modification without statutory cause.
Citations
- Insolvency and Bankruptcy Code, 2016, Section 12(1)
