Supreme Court reviews NCLT order's impact on Resolution Plan approval under Insolvency & Bankruptcy Code 2016

The Supreme Court considered the impact of an NCLT order on the requisite majority for passing a Resolution Plan under the Insolvency and Bankruptcy Code 2016. Despite the Resolution Plan being approved by 100% of the Committee of Creditors, the Court allowed the appellant to submit an affidavit detailing the NCLT order's potential effect on the majority needed for the Plan's approval. Both parties were given the opportunity to exchange affidavits, with the Court setting a hearing date for thorough consideration of the issue on 18 March 2021.

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Issues:
1. Interpretation of the impact of an NCLT order on the requisite majority for passing a Resolution Plan under the Insolvency and Bankruptcy Code 2016.

Analysis:
The Supreme Court addressed the issue raised during submissions regarding an order passed by the Mumbai Bench of the National Company Law Tribunal (NCLT) stating that certain entities recognized as financial creditors are not actually financial creditors. The Court considered whether this NCLT order would affect the necessary majority for approving a Resolution Plan under Section 30(4) of the Insolvency and Bankruptcy Code 2016. Notably, the Resolution Plan had already been endorsed by 100% of the voting share of the Committee of Creditors. The Court allowed the appellant to file an affidavit disclosing the NCLT order's impact, if any, on the majority required for passing the Resolution Plan by a specified deadline. Additionally, the respondent's counsel was permitted to file a counter-affidavit if necessary, with both parties exchanging advance copies of the affidavits. The Court scheduled the Civil Appeal for listing on 18 March 2021, indicating a thorough consideration of the matter at hand.

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