Despite various decisions by the Hon’ble Supreme Court, ranging from Innoventive Industries to K. Sashidhar to the Essar Steel case, the Hon’ble Supreme Court has consistently laid out how the law should be interpreted with regard to the approval of a resolution plan and the primacy given to the commercial wisdom of CoC’s. Despite these judgements, there has been incidents of DELAY IN ACCEPTING THE RESOLUTION PLAN by tribunal. This is one if the challenge being faced in interpretation of provisions of IBC.

Although the legislation has clearly enunciated the rights of various stakeholders, such as aggrieved financial creditors, operational creditors, and promoters, in several Supreme Court judgements, yet delays are often seen. Regardless of its best efforts to preserve the value of businesses and to address the ills of financially unviable businesses being allowed to continue for long periods of time, the Insolvency and Bankruptcy Code, 2016 (IBC) has been found to fall short in implementing resolution plans, both after approval by the Committee of Creditors (CoC) and after approval by the Adjudicating Authority.

When the application for approval of the resolution plan is brought before the Adjudicating Authority, several parties frequently intervene to try to delay, or even prevent, the approval of the resolution plan.

Some of the problems that resolution candidates have faced are listed below:
• The amount of time being taken by Tribunal for accepting the resolution plan. Mentioning time here refers to the fact that sometimes it has taken between 12 and 15 months .Also contribution to this delay is due to various other reasons like Multiple petitions filed by numerous parties as well as the frequent back and forth of such applications from the NCLT to the NCLAT, and in some circumstances, up to the Hon’ble Supreme Court.

• Often, The earlier promoters of the corporate debtor are blamed for this delay. The pretexts include contesting the CoC’s constitution, proposing OTS at the last minute right before approval, and querying the resolution applicant’s constitution under IBC Section 29A.

• Even operational creditors have been known to obstruct resolution plan approval by filing several applications, which they then insist on being approved. In this manner it causes more delay on the part of Tribunal due to heavy workloads coming in.

• One of the banks that voted against the resolution plan filed an application disputing the valuation of one part of the business which resulted in the hearing of an application for approval of a resolution plan being delayed for nearly six months. The Adjudicating Authority was split in its judgement on the valuation in a rare circumstance, and the case had to be referred to a three-member bench, delaying the approval of the settlement plan even more.

• Another issue that frequently arises after the CoC approves the resolution plan is the question of previous statutory liabilities or operational creditors’ claims for the time prior to the resolution plan’s approval. These normally do not survive and are eliminated if the resolution plan specifically states that such obligations are excluded. However, such claimants have the ability to postpone the approval / approval process.

While it is understandable that an applicant has a right to have an application decided, if such applications are to be considered, a clear timetable should be established I for filing all such applications, (ii) for filing replies to such applications, and (iii) for delivering the decision on the application. The IBC’s efficacy would be seen considerably enhanced only if a resolution plan would be approved in a timely manner. Imposing significant fines on applicants who submit frivolous petitions would also be beneficial to avoid delay.

Delays in the approval or execution of a resolution plan have an influence on all stakeholders and have a substantial impact on the overall success of the resolution plan’s implementation. Because one of the goals of the IBC is to maximise value, such delays dilute value and may even diminish the chances of a corporate debtor’s recovery, pushing it toward liquidation, which is not desirable.