The NCLAT has temporarily stayed the NCLT's rejection of an 83.97% Committee of Creditors (CoC)-approved resolution plan due to concerns over related-party transactions and share valuation, necessitating further appellate review.
NCLAT Stays NCLT's Rejection of CoC-Approved Resolution Plan
The National Company Law Appellate Tribunal (NCLAT) has stayed the National Company Law Tribunal's (NCLT) decision that rejected a resolution plan supported by 83.97% of the Committee of Creditors (CoC). The stay was granted amidst concerns regarding the related-party status of certain transactions and the valuation of shares issued under the resolution plan.
The NCLAT indicated that the issues around related-party transactions require comprehensive appellate scrutiny before a final determination can be made. By halting the NCLT's earlier order, NCLAT highlighted the need for an in-depth analysis of the potential implications of such share issuances and their impact on the resolution process.
This stay is crucial for legal practitioners as it emphasizes the significance of thorough evaluations of transaction structures within resolution plans, particularly when related parties are involved. The decision reinforces the court’s approach toward ensuring due diligence in corporate restructuring efforts.
Citations
- Order dated 18 August 2026
