Approved resolution plan on a clean slate extinguishes pre-CIRP claims and binds all stakeholders under insolvency law.

An approved resolution plan was found compliant with the Insolvency and Bankruptcy Code, 2016 and CIRP Regulations, 2016 because it provided for CIRP costs, treatment of financial and operational creditors, workmen and employees, and post-approval governance in the manner required by law. The plan was therefore approved. Once approved, the plan operated on a clean slate: pre-CIRP claims not preserved in the plan, including governmental, statutory, contingent and unconfirmed dues, stood extinguished to the extent directed, and any remaining tax or statutory reliefs had to be pursued before the competent authorities. Moratorium ceased and the plan became binding and operative.

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Issues: (i) Whether the resolution plan satisfied the requirements for approval under the Insolvency and Bankruptcy Code, 2016 and the CIRP Regulations, 2016. (ii) Whether pre-CIRP claims, including governmental and statutory claims, stood extinguished on approval of the resolution plan and whether reliefs and concessions could be granted in the manner directed.

Issue (i): Whether the resolution plan satisfied the requirements for approval under the Insolvency and Bankruptcy Code, 2016 and the CIRP Regulations, 2016.

Analysis: The plan was examined against the statutory requirements governing resolution plans, including priority payment of CIRP costs, treatment of operational and financial creditors, management and control structure, and compliance with the CIRP regulations. The plan provided for CIRP costs, payment to secured and unsecured financial creditors, treatment of workmen and employees, and a governance structure for post-approval management. The Adjudicating Authority found that the plan did not contravene the law and complied with the relevant statutory and regulatory requirements.

Conclusion: The resolution plan was held compliant and was approved.

Issue (ii): Whether pre-CIRP claims, including governmental and statutory claims, stood extinguished on approval of the resolution plan and whether reliefs and concessions could be granted in the manner directed.

Analysis: The Adjudicating Authority applied the settled principle that an approved resolution plan operates on a clean slate and that claims not provided for in the plan cannot survive after approval. It held that prior liabilities of stakeholders, including governmental and statutory claims, contingent and unconfirmed dues, and claims of suspended management and erstwhile shareholders, stood extinguished to the extent directed. It further directed that statutory and tax-related reliefs and concessions be pursued before the competent authorities, and that the approved plan would take effect in the manner ordered, including cessation of moratorium and consequential corporate actions.

Conclusion: Pre-CIRP claims were held extinguished in accordance with the approved plan, and the requested reliefs were granted only to the extent directed, with remaining statutory reliefs relegated to the competent authorities.

Final Conclusion: The resolution plan was approved, the application was allowed, and the corporate insolvency process moved to implementation with the moratorium ceasing and the plan becoming binding and operative.

Ratio Decidendi: An approved resolution plan, once found compliant with the Code and regulations, binds all stakeholders and extinguishes pre-CIRP claims not preserved in the plan, while statutory reliefs outside the plan must be sought before the competent authority.

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