Published on: September 14, 2021, at 15:11 IST
The Supreme Court on Monday ruled that the approved Resolution Plan submitted before the National Company Law Tribunal (NCLT) can not be amended or withdrawn as it would create a new tier of negotiations.
A Bench of Justices D Y Chandrachud and M R Shah ruled, “The time limit can only be extended in exceptional circumstances as otherwise, the open-ended process for further negotiations or withdrawal would have a negative impact on the Corporate Debtor, its creditors, and the economy at large as the liquidation value depletes over time.”
The matter came into consideration when the NCLT decided to allow Ebix Singapore Private Limited to withdraw its Resolution Plan submitted for Educomp Solutions.
However, the National Companies Law Appellate Tribunal (NCLAT) overturned the NCLT ruling, stating that the NCLT lacked jurisdiction to allow such a withdrawal.
Later, the decision of NCLAT was challenged before the Supreme Court.
The Supreme Court ruled that, in the future, if the legislature recognises the concept of withdrawals or modifications to a Resolution Plan after it has been presented to the NCLT, it must specifically provide for a “tether” under the Insolvency and Bankruptcy Code.