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Tribunal rejects withdrawal of approved resolution plan, emphasizes binding nature of decisions under insolvency law. The National Company Law Tribunal rejected and disposed of the application for withdrawal of an approved resolution plan by a private limited company. The ...
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Tribunal rejects withdrawal of approved resolution plan, emphasizes binding nature of decisions under insolvency law.
The National Company Law Tribunal rejected and disposed of the application for withdrawal of an approved resolution plan by a private limited company. The Tribunal emphasized the binding nature of approved resolution plans under the insolvency framework, citing a Supreme Court ruling that once a plan is approved, it is irrevocable between the Committee of Creditors and the successful resolution applicant. The applicant's request to withdraw the plan due to financial difficulties during the Covid-19 pandemic was not accepted, as the Tribunal noted the lack of provisions allowing for such actions post-approval.
Issues: Withdrawal of approved resolution plan under Rule 11 of NCLT Rules, 2016.
Analysis: The case involved an application by a private limited company to withdraw a resolution plan approved by the National Company Law Tribunal. The applicant, engaged in various industries, submitted a resolution plan in response to a CIRP initiated against another company. The plan included financial proposals and a proposed infusion of funds. However, due to financial difficulties during the Covid-19 pandemic, the applicant sought to withdraw the approved plan.
The respondent, the erstwhile resolution professional, objected to the withdrawal, citing the absence of provisions allowing for such actions post-approval. The respondent highlighted that the resolution plan had been approved by both the CoC and the Adjudicating Authority, emphasizing a Supreme Court ruling that disallowed withdrawal of plans post-approval.
Upon hearing arguments from both parties, the Tribunal noted that the applicant, a successful resolution applicant, had not implemented the approved plan and sought withdrawal. The Tribunal referenced a Supreme Court ruling that stated once a resolution plan is submitted and approved, it is binding and irrevocable between the CoC and the successful resolution applicant. Consequently, the Tribunal rejected and disposed of the application for withdrawal, emphasizing the binding nature of approved resolution plans under the insolvency framework in India.
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