CoC Rejection of Sole Resolution Plan Leads to Liquidation: NCLT

CoC Rejection of Sole Resolution Plan Leads to Liquidation

The NCLT Chandigarh Bench has ruled that the rejection of the only resolution plan by the Committee of Creditors (CoC) necessitates the liquidation of the corporate debtor. The order confirms the tribunal’s authority to enforce prompt and decisive action when resolution attempts fail.

The tribunal stated that the insolvency process must culminate with meaningful outcomes for creditors and stakeholders. The rejection of the lone resolution plan leaves no viable option, thereby triggering liquidation procedures under Section 33 of the IBC.

This decision has substantial implications for those involved in insolvency proceedings, highlighting the importance of thorough due diligence by prospective resolution applicants. It serves as a reminder of the necessity for the CoC to evaluate and act upon resolution proposals prudently to avoid the costly and often protracted process of liquidation.