Can a Successful Resolution Applicant Walk Away After CoC Approval? The Supreme Court Reaffirms the Finality of Resolution Plans under the IBC

Introduction

The Insolvency and Bankruptcy Code, 2016 (“IBC”) was enacted to provide a time-bound framework for resolving corporate insolvency while maximising value for stakeholders. At the heart of this framework lies the Committee of Creditors (“CoC”), whose commercial decisions drive the corporate insolvency resolution process (“CIRP”). Over the years, the Supreme Court has consistently recognised that the CoC’s commercial wisdom deserves minimal judicial interference. Equally important, however, is the principle that once a resolution plan has been approved by the CoC, it must carry a degree of certainty and finality. 

The Supreme Court’s recent decision in Sanjay Dave v. Andhra Bank Ltd. & Ors. reinforces this principle by holding that a Successful Resolution Applicant (“SRA”) cannot indirectly withdraw from or renegotiate a CoC-approved resolution plan by raising objections to conditions that were either known or could reasonably have been anticipated during the CIRP. The judgment strengthens the IBC’s core objectives of certainty, commercial discipline, and timely resolution of stressed assets. 

The Foundation: Commercial Wisdom and Finality

The IBC entrusts the CoC, comprising primarily financial creditors under Section 21, with evaluating the commercial viability of competing resolution plans. Under Section 30(4), the CoC may approve a resolution plan with the requisite voting majority after considering its feasibility, viability and the interests of stakeholders. 

Judicial precedents have consistently held that this commercial assessment is ordinarily beyond the scope of judicial review. While adjudicating authorities may examine whether a resolution plan complies with the statutory requirements under the IBC, they cannot substitute their own commercial assessment for that of the CoC. 

This judicial restraint serves an important commercial purpose. Insolvency resolution is intended to preserve the value of distressed businesses through timely implementation. If every commercial decision of the CoC were susceptible to prolonged litigation or repeated renegotiation, the objective of value maximisation would be undermined. 

However, the effectiveness of this framework depends not only on protecting the CoC’s commercial wisdom but also on ensuring that successful bidders honour the commitments they voluntarily undertake. A resolution plan cannot remain open to renegotiation simply because the successful applicant later finds the transaction commercially less attractive. 

The Supreme Court’s Decision in Sanjay Dave v. Andhra Bank Ltd.

The dispute arose during the CIRP of Oracle Home Textiles Limited. The appellant’s resolution plan received overwhelming support from the CoC, securing approximately 99.90% of the voting share. Following this approval, the Resolution Professional issued a Letter of Intent (“LoI”), requiring the applicant to fulfil various obligations, including the submission of a performance bank guarantee. 

The appellant subsequently challenged certain conditions contained in the LoI, contending that they were inconsistent with the approved resolution plan. The appellant also failed to furnish the required performance guarantee, resulting in the forfeiture of the earnest money deposit of ₹1 crore. Eventually, the CoC resolved to liquidate the corporate debtor under Section 33(2) of the IBC. 

The National Company Law Tribunal (“NCLT”) and the National Company Law Appellate Tribunal (“NCLAT”) rejected the appellant’s challenge. The Supreme Court affirmed these decisions, holding that the objections raised by the appellant were, in substance, an attempt to avoid implementing a resolution plan that had already been accepted through the statutory process. 

The Court observed that permitting such indirect attempts to revisit or dilute an approved resolution plan would undermine the certainty that the IBC seeks to achieve. A successful resolution applicant cannot revisit commercial commitments after obtaining CoC approval merely because subsequent obligations appear onerous or commercially inconvenient. 

Reinforcing Established Insolvency Jurisprudence

While Sanjay Dave addresses a specific factual dispute, the judgment is consistent with the broader insolvency jurisprudence developed by the Supreme Court over the past several years. 

In K. Sashidhar v. Indian Overseas Bank, the Court recognised that the commercial decisions of the CoC ordinarily fall outside judicial review except within the limited parameters prescribed by the IBC. 

Similarly, in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta, the Supreme Court reaffirmed that courts cannot substitute their own commercial assessment for that of the CoC, provided the statutory requirements under the Code have been satisfied. 

Perhaps most significantly, in Ebix Singapore Pvt. Ltd. v. Committee of Creditors of Educomp Solutions Ltd., the Court held that the IBC does not contemplate open-ended negotiations after a resolution plan has been approved by the CoC. Allowing successful applicants to withdraw or materially modify approved plans would defeat the time-bound nature of the insolvency process and create uncertainty for creditors and other stakeholders. 

The decision in Sanjay Dave builds upon these principles by clarifying that even indirect attempts to avoid implementation—through objections to post-approval procedural requirements or ancillary conditions cannot be used as a means to effectively withdraw from a binding commercial commitment. 

Why the Judgment Matters

The significance of the judgment extends beyond the facts of the case. 

First, it reinforces commercial certainty in India’s insolvency regime. Resolution applicants participate in a competitive bidding process after undertaking due diligence and evaluating commercial risks. Once their plan is accepted by the CoC, they cannot subsequently seek to renegotiate the transaction simply because circumstances become commercially less favourable. 

Second, the judgment enhances confidence among financial creditors. Resolution plans often involve multiple stakeholders, including lenders, operational creditors, employees, regulators and prospective investors. Delays arising from post-approval disputes can significantly erode the value of distressed assets and diminish recoveries. By discouraging such disputes, the Court promotes greater certainty in the implementation process. 

Third, the decision serves as an important reminder for prospective resolution applicants to undertake comprehensive legal, financial and operational due diligence before submitting bids. The bidding stage is the appropriate opportunity to evaluate risks, seek clarifications and price commercial uncertainties. Once the CoC approves a plan, the scope for revisiting commercial decisions becomes extremely limited. 

Finally, the judgment reinforces the broader objective of the IBC—to facilitate efficient and predictable insolvency resolution rather than prolonged litigation. Speed, certainty and finality remain central to preserving enterprise value and ensuring that distressed businesses can either be successfully revived or, where necessary, liquidated without avoidable delay. 

Conclusion

The Supreme Court’s decision in Sanjay Dave v. Andhra Bank Ltd. & Ors. further strengthens one of the foundational principles of the IBC: commercial commitments made during the insolvency resolution process must be honoured once they receive the approval of the Committee of Creditors. 

The ruling does not introduce a new legal doctrine; rather, it reinforces the jurisprudential framework established in K. Sashidhar, Essar Steel and Ebix Singapore. Collectively, these decisions affirm that while the CoC’s commercial wisdom deserves judicial deference, the integrity of the insolvency process also depends on ensuring that successful resolution applicants remain bound by the commitments they voluntarily undertake. 

As India’s insolvency framework continues to evolve, the judgment sends a clear message to all stakeholders: the CIRP is not a platform for indefinite commercial negotiations but a structured, time-bound process designed to deliver certainty, maximise value and promote confidence in the country’s insolvency ecosystem. 

Last Updated on 8 July, 2026