CoC Cannot Withdraw Resolution Plan Nod: SC

What happened

The Supreme Court ruled that a Committee of Creditors cannot withdraw its approval of a resolution plan after it has been placed before the National Company Law Tribunal, even if the debt-laden company's finances have improved considerably.

Confirmed

Global impact / market context

This limits lenders' ability to reopen deals when a distressed company's fortunes improve, which means banks such as Bank of India may be stuck with agreed recoveries instead of potentially higher payouts, shaping how they value future insolvency settlements.

Analyst inference

The ruling affects lenders named in the appeal, including Canara Bank and Union Bank of India, by making insolvency outcomes more predictable once a plan reaches the tribunal, which could influence how investors assess recovery prospects for banks holding stressed loans.

Analyst inference

What to watch

1. The bench directed the tribunal to consider together the application for approval of the resolution plan and the holding company's application for a one-time settlement and an end to the insolvency process. Confirmed
2. Bankers may push for clearer rules on when a committee can revisit approved plans, so future deals price in less risk of reversal after improved company results. Proposed
3. If tribunals now approve such plans more readily, banks could see faster recoveries but smaller upside when a borrower's finances recover, affecting profit per sale on stressed assets. Analyst inference

Evidence

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