Consensual settlement before liquidation can justify withdrawal of proceedings and recall of CIRP to maximise value and revive the debtor.

A settlement approved by the sole financial creditor and the entire committee of creditors before expiry of the maximum CIRP period may justify withdrawal of a pending liquidation application and recall of the CIRP, where no formal liquidation order has yet been passed. The text treats revival and resolution as the Insolvency and Bankruptcy Code's primary objective, with liquidation as a last resort. It also notes that the liquidation framework can preserve value through sale of the corporate debtor or its business as a going concern. On that basis, the settlement was regarded as bona fide, reasonable, and conducive to value maximisation, with moratorium ceasing after recall.

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Issues: Whether the settlement arrived at between the corporate debtor and the sole financial creditor, approved by the entire committee of creditors, warranted withdrawal of the pending liquidation application and recall of the corporate insolvency resolution process.

Analysis: The settlement was reached before completion of the maximum CIRP period, and the sole member of the committee of creditors had accepted it unanimously. The order treats revival and resolution as the primary object of the Insolvency and Bankruptcy Code, with liquidation being a last consequence. It was further noted that no formal liquidation order had yet been passed, and that the liquidation framework permits sale of the corporate debtor or its business as a going concern. On that basis, the settlement was found to be bona fide, reasonable, and conducive to maximisation of value.

Conclusion: The settlement was accepted, the liquidation application was withdrawn, and the CIRP was recalled with cessation of moratorium.

Final Conclusion: The applications were disposed of by giving effect to the consensual settlement and restoring the matter to a resolution-oriented outcome rather than liquidation.

Ratio Decidendi: Where a settlement is reached with the approval of the entire committee of creditors before a formal liquidation order, the adjudicating authority may permit withdrawal of liquidation proceedings and recall of CIRP in furtherance of value maximisation and revival of the corporate debtor as a going concern.

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