MSME resolution plans may be accepted from eligible promoters without completing the usual competitive invitation process.

In an MSME insolvency, a promoter who is not ineligible under section 29A may be considered for a resolution plan even if the usual competitive process has not first been fully completed. The Committee of Creditors may defer issuance of the expression of interest and circulation of the information memorandum in exceptional circumstances where the promoter's proposal is viable, feasible and compliant with the Code, and capable of maximising value and balancing stakeholder interests. The Tribunal also declined to grant the appellants a further opportunity to submit a plan, noting the advanced stage of the process and related eligibility concerns.

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Issues: (i) Whether, in the case of a corporate debtor qualifying as an MSME, the Committee of Creditors could defer issuance of the expression of interest and permit consideration of the promoter's resolution plan without first following the full process of inviting competing resolution applicants and circulating the information memorandum; (ii) Whether the appellants were entitled to an opportunity to submit their own resolution plan.

Issue (i): Whether, in the case of a corporate debtor qualifying as an MSME, the Committee of Creditors could defer issuance of the expression of interest and permit consideration of the promoter's resolution plan without first following the full process of inviting competing resolution applicants and circulating the information memorandum.

Analysis: The resolution framework under the Insolvency and Bankruptcy Code is directed towards time-bound resolution, preservation of the corporate debtor as a going concern, and maximisation of value. Where the corporate debtor is an MSME and the promoter is not ineligible under section 29A, the promoter may be permitted to submit a viable and feasible resolution plan. In such exceptional circumstances, the Committee of Creditors may defer the usual process of publication of the expression of interest and circulation of the information memorandum if the promoter's proposal is capable of satisfying creditors and balancing stakeholder interests. The approved plan in this case was found compliant, feasible, and viable, and had received the requisite voting support.

Conclusion: The deferral of the usual invitation process and consideration of the promoter's plan was held to be permissible, and the objection of non-compliance was rejected.

Issue (ii): Whether the appellants were entitled to an opportunity to submit their own resolution plan.

Analysis: The Tribunal noted that the process had already progressed through multiple Committee of Creditors meetings, the promoter's plan had been actively considered, and one of the appellant group's directors had an NPA account with the lead bank. In the circumstances, the Tribunal declined to grant a further opportunity to the appellants to place their offer.

Conclusion: The appellants were held not entitled to any further opportunity to submit a resolution plan.

Final Conclusion: The approval of the resolution plan was sustained on the basis that MSME promoter-led resolution may be accepted in exceptional circumstances when it is viable, feasible, and compliant with the Code, and the challenge to the approval failed.

Ratio Decidendi: In an MSME insolvency, if the promoter is eligible and the proposed resolution plan is viable, feasible, and compliant with the Code, the Committee of Creditors may accept the promoter's plan and need not invariably complete the standard competitive invitation process before approval.

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