IBC settlement and confirming affidavit led to closure of CIRP admission, subject to revival on breach

An insolvency admission under Section 7 of the IBC was linked to a settlement recorded through the appellant's undertaking and the respondent's confirming affidavit, with the respondent stating no objection to closure of the CIRP and reserving liberty to revive proceedings on breach. On that basis, the continuation of the admission order was treated as no longer justified, and the impugned order admitting the corporate debtor to CIRP was set aside.

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Issues: Whether the order admitting the corporate debtor to the Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016 was liable to be set aside in view of the settlement recorded through the appellant's undertaking and the respondent's confirming affidavit.

Analysis: The appeal was considered in the backdrop of an undertaking dated 01.07.2024 by which the appellant agreed to cooperate with the assignee for recovery through the security interest route and sought closure of the insolvency process. An additional affidavit filed by the respondent recorded the mutual understanding between the parties and confirmed that the respondent had no objection to closure of the CIRP, while reserving liberty to revive the proceedings in case of breach of the undertaking. In these circumstances, the basis for continuation of the insolvency admission order no longer survived.

Conclusion: The impugned order admitting the corporate debtor to CIRP was set aside and the appeal was allowed.

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