Lawstreet Journal

NCLT/NCLAT Should Strictly Adhere to IBC Timelines, Delays Cause Commercial Uncertainty: Supreme Court [READ JUDGMENT]

Lawstreet Journal 15 Sep 2021 8:34pm

Image courtesy: Lawstreet Journal Judiciary NCLT/NCLAT Should Strictly Adhere to IBC Timelines, Delays Cause Commercial Uncertainty: Supreme Court [READ JUDGMENT]

The Supreme Court has urged the National Company Law Tribunal (NCLT) / National Company Law Appellate Tribunal (NCLAT), the adjudicating and appellate authorities under the Insolvency and Bankruptcy Code, 2016 to strictly adhere to the IBC's timelines and to clear pending resolution plans as soon as possible.

According to the court, excessive delays cause commercial uncertainty, a decrease in the value of the Corporate Debtor, and make the insolvency process inefficient and costly.

The bench of Justices DY Chandrachud and MR Shah made these observations in the judgement Ebix Singapore Private Limited vs. Committee of Creditors of Educomp Solutions Limited, in which it held that the NCLT cannot permit modifications or withdrawals of CoC-approved Resolution Plans at the request of the successful Resolution Applicant once the plan has been submitted to it.

"It would also be sobering for us to recognise that, while this Court has declared the legal position to not allow a successful Resolution Applicant to withdraw or modify its Resolution Plan after submission to the Adjudicating Authority, long delays in approving the Resolution Plan by the Adjudicating Authority affect the subscribing parties. These delays, if systemic and frequent, will have an undeniable impact on the commercial assessment that the parties undertake during the course of the negotiation," the court stated in its decision.

This follows the court's observation of the resolution applicants' contention that the NCLT's inordinate delay in approving the Resolution Plan, combined with the outbreak of the COVID-19 pandemic, had a significant impact on… Continue Reading...

Tagged: Insolvency and Bankruptcy Code   Supreme Court of India   NCLT   NCLAT  
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