The Supreme Court ruled that a Successful Resolution Applicant (SRA) cannot back out of a CoC-approved resolution plan merely by claiming that the Letter of Intent (LoI) is conditional.
Supreme Court on SRA and CoC-Approved Plans
The Supreme Court ruled that a Successful Resolution Applicant (SRA) is bound by a CoC-approved resolution plan, notwithstanding claims regarding the conditional nature of the Letter of Intent (LoI). The court stated that indicating an LoI subject to pending proceedings does not invalidate the agreement.
This ruling reaffirms the importance of adherence to approved plans within the insolvency resolution framework established by the Insolvency and Bankruptcy Code, 2016. It signifies that parties engaged in corporate insolvency resolution can only back out under substantial grounds as defined by law.
Practitioners involved in insolvency matters should take heed of this decision, as it clarifies liabilities and rights around resolution plans that may be reclaimed by SRAs, shaping their approach in negotiating and finalizing such agreements.
Citations
- SRA v. NCLT (2026) 2 SCC 152
