Restructuring plans failing Section 30(2) requirements cannot be treated as Resolution Plans, mandating liquidation.

The Appellant, the erstwhile Managing Director of Veda Biofuel Limited (the Corporate Debtor), challenged the order dated 26.05.2020 passed by the Adjudicating Authority (NCLT).

The NCLT had rejected IA No. 64/2020, which sought approval of a "restructuring plan" submitted by the promoter and approved by the Committee of Creditors (CoC) in its 20th meeting.

The Adjudicating Authority rejected the plan on the grounds that it did not qualify as a "Resolution Plan" under the Insolvency and Bankruptcy Code, 2016 (IBC) and subsequently ordered the liquidation of the Corporate Debtor under Section 33(1)(b).

During the pendency of the appeal, the assets of the Corporate Debtor were sold in liquidation, and a sale certificate was issued on 03.12.2024.

Section 30(2) of the IBC, which mandates specific statutory requirements and compliances for a Resolution Plan to be valid.

Section 33(1)(b) of the IBC, which requires the Adjudicating Authority to pass a liquidation order if the Resolution Plan is rejected for non-compliance with the Code.

The court also distinguished between a Resolution Plan and a proposal for withdrawal under Section 12A of the IBC, noting that a promoter's restructuring proposal is more akin to the latter and must adhere to the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

The Appellate Tribunal observed that the "restructuring plan" approved by the CoC was not a Resolution Plan within the statutory framework of the IBC.

The Tribunal reasoned that the plan was not submitted in response to an Expression of Interest (EOI) invited by the Resolution Professional, a mandatory step under the CIRP Regulations.

The court held that a promoter’s restructuring proposal should be treated as a proposal for withdrawal under Section 12A rather than a Resolution Plan.

Since the plan failed to meet the mandatory requirements of Section 30(2), the Adjudicating Authority was correct in rejecting it.

Consequently, the Tribunal found that the failure to produce an approved, compliant plan necessitated a liquidation order under Section 33(1)(b).

Furthermore, the court noted that since the liquidation process had concluded with the issuance of a sale certificate, the appeal had become infructuous.

The court affirmed the Adjudicating Authority’s decision, stating that no grounds existed to interfere with the impugned order.

The Appeal was dismissed, both on merits and for being infructuous due to the completed sale of assets in liquidation.