The Supreme Court ruled that the Committee of Creditors cannot withdraw an approved resolution plan solely due to the corporate debtor’s improved financial position.
The Supreme Court has held that once a resolution plan is approved by the Committee of Creditors (CoC) and confirmed by the Adjudicating Authority, it cannot be withdrawn based on the subsequent improvement in the financial health of the corporate debtor.
The Court emphasized the finality of resolution plans under the Insolvency and Bankruptcy Code (IBC), noting that allowing withdrawal on such grounds would undermine the time-bound nature of CIRP. The judgment cited Committee of Creditors of Essar Steel Ltd. v. Satish Kumar Gupta, affirming that post-confirmation improvements do not invalidate binding creditor decisions.
Implication: This decision strengthens legal certainty in insolvency proceedings. Practitioners must advise creditors that post-approval financial changes do not constitute valid grounds for withdrawal, reinforcing plan enforceability.
Citations
- Insolvency and Bankruptcy Code, 2016
- Committee of Creditors of Essar Steel Ltd. v. Satish Kumar Gupta (2020) 8 SCC 531
