Resolution plan cannot be modified after CoC approval
The tribunal reiterates the commercial wisdom principle and declines to reopen an approved plan on ground of market change.
What Happened
A successful resolution applicant sought to revise the payment schedule in an approved resolution plan, citing a downturn in steel prices between the date of approval and the date of implementation.
Legal Issue
Whether an adjudicating authority may permit modification of a resolution plan after it has been approved by the committee of creditors on the ground of a subsequent change in market conditions.
Court Held
The tribunal held that the commercial wisdom of the committee of creditors is not open to review on merits, and that permitting post-approval modification would render the bidding process meaningless. A resolution applicant assumes the risk of market movement between approval and implementation. The appeal was dismissed.
Key takeaways
- Approved resolution plans are not open to modification for market reasons.
- Commercial wisdom of the committee of creditors is not reviewable on merits.
- Market risk between approval and implementation sits with the applicant.
- Withdrawal remains subject to the statutory route and forfeiture.
Why It Matters
Resolution applicants must price implementation risk into the bid itself, since the tribunal will not act as a renegotiation forum after approval.