Resolution plan approval under insolvency law becomes binding on stakeholders and lifts the moratorium on sanction.

A resolution plan under the Insolvency and Bankruptcy Code was found compliant with the statutory framework, including the CIRP Regulations and eligibility requirements for the resolution applicant, because it addressed stakeholder payments, was stated to be feasible and viable, exceeded liquidation value, and included the applicant's eligibility declaration. After the committee of creditors approved the revised plan by the requisite majority, the adjudicating authority sanctioned it, noting no contravention of law. On approval, the plan became binding on the corporate debtor and all stakeholders, and the moratorium ceased with effect from the order date.

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Issues: (i) whether the resolution plan satisfied the statutory requirements for approval, including compliance with the Code, the CIRP Regulations, and eligibility of the resolution applicant; (ii) whether the plan, having been approved by the committee of creditors, deserved approval of the adjudicating authority and what the legal consequences of such approval would be.

Issue (i): whether the resolution plan satisfied the statutory requirements for approval, including compliance with the Code, the CIRP Regulations, and eligibility of the resolution applicant.

Analysis: The plan was examined with reference to the requirements of section 30(2) of the Insolvency and Bankruptcy Code, 2016 and regulations 37, 38, 38(1A) and 39 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The materials recorded that the plan addressed the insolvency objective, provided for payments to stakeholders, was stated to be feasible and viable, was higher than liquidation value, and was accompanied by the resolution applicant's declaration of eligibility under section 29A. The committee of creditors also reconsidered the proposal after revisions to the financial terms.

Conclusion: The resolution plan was found to comply with the statutory framework and was treated as eligible for approval.

Issue (ii): whether the plan, having been approved by the committee of creditors, deserved approval of the adjudicating authority and what the legal consequences of such approval would be.

Analysis: The committee of creditors approved the revised plan by the requisite majority under section 30(4) of the Insolvency and Bankruptcy Code, 2016. The order records that the plan was not in contravention of the law, that it would bind the corporate debtor and its stakeholders, that the moratorium under section 14 would cease on approval, and that the approved plan would become effective from the date of the order.

Conclusion: The adjudicating authority approved the resolution plan, making it binding on the corporate debtor and all stakeholders and bringing the moratorium to an end.

Final Conclusion: The insolvency resolution process culminated in judicial approval of the creditors' approved resolution plan, with consequential binding effect on the corporate debtor and cessation of moratorium.

Ratio Decidendi: A resolution plan that satisfies the statutory requirements of the Code and CIRP Regulations and secures the requisite creditor approval may be sanctioned by the adjudicating authority, whereupon it becomes binding on the corporate debtor and stakeholders and the moratorium stands lifted.

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