Insolvency and Bankruptcy Hotline: Supreme Court Rules on Commercial Wisdom of Creditors to Allow Withdrawal of Insolvency Proceedings

This article was originally published by IBC Laws on July 02, 2022.

INTRODUCTION

In Vallal RCK v M/s Siva Industries & Anr. (2022) ibclaw.in 63 SC, the Supreme Court (“SC”) has once again given precedence to the commercial wisdom of the committee of creditors (“CoC”). The issue before the SC was whether the Adjudicating Authority could interfere with the CoC’s decision to allow withdrawal of insolvency proceedings on the basis of a settlement plan. The SC held that the adjudicating authority, while deciding an application under Section 12A of the Insolvency and Bankruptcy Code (“Code”), cannot review the merits of a settlement plan approved by the CoC.

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