Resolution plan compliance under insolvency law confirmed; approved plan binds stakeholders and extinguishes unpreserved liabilities.

The resolution plan was examined for compliance with the Insolvency and Bankruptcy Code, 2016 and the related resolution regulations, including payment of insolvency resolution process costs, treatment of operational creditors, stakeholder protection, implementation mechanics, Form H filing, and eligibility under section 29A. The adjudicating authority confined review to the statutory parameters under sections 30(2) and 31 and did not reappraise the Committee of Creditors' commercial wisdom. On approval, the plan became binding on the corporate debtor, its employees, creditors, guarantors, governments, local authorities, and other stakeholders, while crystallized and unclaimed liabilities were extinguished and the moratorium ceased.

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Issues: (i) Whether the resolution plan satisfied the requirements of the Insolvency and Bankruptcy Code, 2016 and the corresponding insolvency resolution regulations, including eligibility of the successful resolution applicant. (ii) What was the legal effect of approval of the resolution plan on the corporate debtor and its pre-existing liabilities.

Issue (i): Whether the resolution plan satisfied the requirements of the Insolvency and Bankruptcy Code, 2016 and the corresponding insolvency resolution regulations, including eligibility of the successful resolution applicant.

Analysis: The plan had been approved by the Committee of Creditors with overwhelming voting share after the resolution professional placed it for consideration under the statutory framework. The record showed compliance with the requirements relating to payment of insolvency resolution process costs, treatment of operational creditors, stakeholder interests, implementation mechanism, and filing of Form H. The plan was also found not to offend the ineligibility bar under section 29A, and the adjudicating authority confined its scrutiny to the parameters of section 30(2) and section 31, without entering into the commercial merits of the CoC's decision.

Conclusion: The resolution plan satisfied the statutory requirements and was approved.

Issue (ii): What was the legal effect of approval of the resolution plan on the corporate debtor and its pre-existing liabilities.

Analysis: Once approved, the plan was made binding on the corporate debtor, its employees, creditors, guarantors, governments, local authorities, and other stakeholders. The order further recorded that crystallized and unclaimed liabilities stood extinguished, that the moratorium under section 14 would cease, and that the corporate debtor was to proceed under the amended constitutional and corporate framework contemplated by the plan. The plan approval therefore brought finality to claims not preserved under the approved resolution framework.

Conclusion: The approved plan became binding on all stakeholders and extinguished pre-existing liabilities not preserved under the plan.

Final Conclusion: The corporate insolvency resolution process culminated in approval of the resolution plan, with the plan becoming operative and binding while the moratorium came to an end.

Ratio Decidendi: In approval of a resolution plan, the adjudicating authority's scrutiny is confined to statutory compliance under the Insolvency and Bankruptcy Code, 2016 and the regulations, and it cannot substitute its view for the commercial wisdom of the Committee of Creditors.

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