Insolvency resolution plan upheld where nil payment to operational creditors was consistent with liquidation priority and no discrimination was shown.

A resolution plan under the Insolvency and Bankruptcy Code was upheld where liquidation value was insufficient even to satisfy secured financial creditors in full. Nil payment to operational creditors was treated as consistent with section 30(2)(b) read with section 53(1), because the liquidation hierarchy left no distributable amount for that class. The challenge based on discriminatory treatment also failed, as no operational creditor was given preferential payment over another. The decision reiterated that the commercial wisdom of the Committee of Creditors will not be interfered with once statutory approval requirements are met.

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Issues: Whether the approved resolution plan violated the Insolvency and Bankruptcy Code, 2016 by providing nil payment to the operational creditors and by allegedly treating similarly situated operational creditors discriminatorily.

Analysis: The resolution plan was approved by the Committee of Creditors by a 95.07% voting share and, on scrutiny of the plan, the liquidation value was found to be insufficient even to satisfy the claims of secured financial creditors in full. In that situation, the plan's provision for nil payment to operational creditors was held to be consistent with the minimum threshold under section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016 read with the liquidation priority under section 53(1). The Tribunal further noted that no payment had been earmarked for any operational creditor as a class, so there was no hostile discrimination among similarly placed operational creditors. The Tribunal also reiterated that the commercial wisdom of the Committee of Creditors could not be interfered with once the plan satisfied the statutory requirements for approval.

Conclusion: The resolution plan was held to be legally valid, with no infirmity or illegality in its approval, and the challenge by the operational creditors failed.

Ratio Decidendi: A resolution plan that provides nil payment to operational creditors is not contrary to section 30(2)(b) where the liquidation value is insufficient to yield any distribution to them under section 53, and such a plan cannot be struck down on a discrimination plea when no operational creditor class is granted preferential payment over another.

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