Insolvency and Bankruptcy Code govern resolution plan approvals by Committee of Creditors
Insolvency and Bankruptcy Code govern resolution plan approvals by Committee of Creditors
Key legal insights on resolution plan approval and statutory obligations under the IBC framework
The National Company Law Tribunal, Mumbai Bench-I, recently approved a ₹3.4 crore resolution plan for the corporate debtor Steadfast Shipping Pvt Ltd., marking a significant development in the insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. While the Tribunal sanctioned the plan following unanimous approval from the Committee of Creditors, it underscored that statutory obligations remain intact, reaffirming that such approval does not waive regulatory compliance.
Background: Insolvency Proceedings Against Steadfast Shipping Pvt Ltd.
The Corporate Insolvency Resolution Process for Steadfast Shipping Pvt Ltd., a ship leasing company, was initiated on November 27, 2024. This followed a Section 7 petition filed by Punjab National Bank (International) Limited, the sole financial creditor and member of the Committee of Creditors. The insolvency proceedings aimed to address financial distress and ensure value maximization for stakeholders.
Resolution Plan Submission and Approval
M/s Priyam Projects (I) Pvt Ltd. submitted the resolution plan, initially dated April 18, 2025, and later revised on May 20, 2025. The plan received 100% assent from the CoC during its seventh meeting on May 22, 2025. The Resolution Professional (RP), Nilesh Rajendra Kothari, formally filed the application for approval of the plan under Sections 30(6) and 31 of the IBC. Key compliance documents, including Form-H and an affidavit certifying the resolution applicant’s eligibility under Section 29A of the IBC, were submitted to the Tribunal. Additionally, the resolution applicant furnished a performance security deposit of ₹34 lakh as part of the procedural requirements.
Tribunal’s Assessment and Observations
The NCLT Bench, comprising Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar, meticulously examined the resolution plan in accordance with statutory provisions. Notably, the plan’s value of ₹3.4 crore was higher than the liquidation value of ₹3.24 crore, signifying an enhanced recovery for creditors.
The plan included:
- Payment of ₹25 lakh towards CIRP costs
- ₹2.3 crore to the secured financial creditor within 60 days
- Formation of an Implementation and Monitoring Committee to supervise the execution of the plan
These elements reflected adherence to the objectives of the IBC, aiming for timely resolution and maximum value realization.
Statutory Compliance and Legal Precedents
Referencing the Supreme Court’s landmark ruling in Ghanshyam Mishra & Sons Pvt Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., the Tribunal emphasized that approval of a resolution plan does not constitute a waiver of statutory obligations. Any relief or concessions envisaged in the plan remain subject to scrutiny and approval by competent authorities under relevant laws. This clarification safeguards the regulatory framework and ensures that resolution plans do not undermine statutory duties or regulatory oversight.
Final Directions and Implications
The NCLT approved the resolution plan with clear directives for strict adherence to stipulated timelines and statutory compliance. The moratorium under Section 14 of the IBC was lifted, facilitating the implementation of the approved plan under vigilant supervision. This decision reinforces the principles of transparency, accountability, and legal compliance in insolvency resolution, serving as a precedent for future cases where statutory obligations intersect with resolution efforts.
The approval of the ₹3.4 crore resolution plan for Steadfast Shipping Pvt. Ltd. by the NCLT Mumbai Bench underscores the robustness of the IBC framework in balancing creditor interests and statutory compliance. While the plan promises financial recovery and operational continuity, the Tribunal’s insistence on regulatory adherence highlights the importance of lawful execution beyond mere approval. This case serves as a critical reminder for resolution applicants, insolvency professionals, and creditors that statutory obligations remain paramount throughout and beyond the resolution process.
