The NCLT has rejected a resolution plan involving ₹1,000 share conversion due to non-compliance with statutory valuation requirements under the Companies Act, leading to an order for liquidation.
NCLT Rejects Resolution Plan for Non-Compliance
The National Company Law Tribunal (NCLT) has ordered the liquidation of a corporate debtor after rejecting a resolution plan that involved a ₹1,000 share conversion. The tribunal found that the conversion lacked a statutory valuation basis, violating compliance requirements as stipulated under the Companies Act.
The NCLT highlighted the necessity of adhering to proper valuation norms to ensure fairness to all creditors and stakeholders involved in the insolvency process. The tribunal emphasized that any resolution plan must comply with legal frameworks to protect the interests of the creditors, particularly when substantial financial implications are at stake.
This ruling serves as a reminder for practitioners in the field of insolvency and corporate law about the critical importance of adhering to statutory requirements when formulating resolution plans, as non-compliance could not only derail the process but also lead to serious ramifications like liquidation.
Citations
- NCLT Order (2026) NCLT Order No. 1450474
