CoC Cannot Withdraw Resolution Plan Post NCLT Filing: Apex Court

What happened

The Supreme Court ruled that a Committee of Creditors cannot withdraw its approved resolution plan after it is 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 insolvency decisions when a company's fortunes recover, which means banks such as Bank of India and Canara Bank must honor plans they approved, reducing flexibility but strengthening certainty for buyers.

Analyst inference

The ruling reinforces that resolution plans approved through the Insolvency and Bankruptcy Code's voting process bind all creditors, including dissenters, which may make investors more confident that approved deals will be completed as written.

Analyst inference

What to watch

1. The bench directed the tribunal to consider together the application seeking approval of the resolution plan and the holding company's application seeking a one-time settlement and an end to the insolvency process. Confirmed
2. Watch whether the tribunal approves the resolution plan or instead accepts the holding company's one-time settlement request, since the court ordered both applications to be considered together. Proposed
3. If one-time settlements become harder to pursue after CoC approval, lenders may scrutinize plans more carefully before filing, which could slow insolvency resolutions and affect recoveries for banks. Analyst inference

Evidence

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