The Supreme Court has ruled that creditors cannot withdraw an approved insolvency plan solely because a company’s finances improve.
What Did the Supreme Court Rule?
In its October 26 judgment, the Supreme Court clarified that a resolution plan approved by the Committee of Creditors (CoC) under the Insolvency and Bankruptcy Code (IBC) becomes binding on creditors and the successful resolution applicant even before confirmation by the National Company Law Tribunal (NCLT).
The court held that subsequent improvements in a corporate debtor’s financial position cannot independently justify withdrawing an approved plan, even if those developments make the original agreement less commercially attractive to creditors.
The ruling reinforces…