The NCLT ordered liquidation of a corporate debtor as no viable resolution plan emerged, following an 80.86% vote by the Committee of Creditors (CoC). This ruling underscores the challenges in achieving resolutions under the Insolvency and Bankruptcy Code.
NCLT Orders Liquidation Due to Absence of Viable Resolution Plan
The National Company Law Tribunal (NCLT) has ordered the liquidation of a corporate entity after no viable resolution plan was presented, despite an extended process for obtaining Expressions of Interest (EOI). The ruling followed a decisive approval from the Committee of Creditors (CoC), with 80.86% voting in favor of liquidation.
The NCLT highlighted that after multiple extensions to attract potential resolution applicants, the absence of a credible resolution plan necessitated the decision to liquidate. This emphasizes the stringent requirements that stakeholders must meet to avoid liquidation under the Insolvency and Bankruptcy Code (IBC).
The implications of this ruling for practitioners are significant, as they must ensure that resolution plans are viable and meet the expectations of creditors to avert liquidation. Legal advisors will need to conduct thorough evaluations and engage proactively with stakeholders during the resolution process.
Citations
- NCLT Order (2026) NCLT 987
