The Calcutta High Court ruled that a resolution applicant is not responsible for a corporate debtor's pre-Corporate Insolvency Resolution Process (CIRP) late payment surcharge (LPSC), highlighting the 'clean slate' principle in insolvency cases.
Calcutta HC Rules on Pre-CIRP Liability of Resolution Applicants
The Calcutta High Court has confirmed that a resolution applicant is not liable for the pre-Corporate Insolvency Resolution Process (CIRP) late payment surcharge (LPSC) demanded by a power department. This demand was found to be arbitrary, violating the principles of a 'clean slate' as established during the insolvency resolution process.
The court indicated that since the approved resolution plan did not cater to such claims, enforcing payment would contravene the established guidelines within insolvency resolution frameworks. The decision underscores the importance of adhering to the content of resolution plans in corporate restructuring.
“The resolution applicant should not bear the burden arising from the corporate debtor's past liabilities,” the bench stated.
This decision holds significant implications for practitioners involved in insolvency matters, particularly regarding the rights and responsibilities of resolution applicants in the aftermath of insolvency proceedings.
Citations
- Order (2026) Calcutta HC 789
