The Supreme Court on Wednesday (September 30) held that, under the Insolvency and Bankruptcy Code, 2016, the Adjudicating Authority can recall the admission of a Section 9 insolvency application if the proceedings were initiated based on fraudulent or collusive jurisdictional facts.
However, the Court clarified that such a finding of fraud does not automatically require termination of the entire Corporate Insolvency Resolution Process (CIRP). Once insolvency proceedings have been admitted and have assumed an in rem character, the Adjudicating Authority (AA) must separately determine whether the CIRP should continue in the interests of the corporate debtor and its other stakeholders.
“…insolvency resolution process can be continued…