When Creditors Choose Settlement: Scope of Withdrawal of Insolvency Proceedings under Section 12A of IBC; The Byju’s Insolvency SAGA: Settlement, Withdrawal and The Limits of Section 12A – By Shubhangi Shukla
This article analyzes the scope of withdrawing insolvency proceedings under Section 12A of the IBC, focusing on the Byju’s case and recent judicial clarifications.Summary
The article examines the legal framework for withdrawing Corporate Insolvency Resolution Process (CIRP) applications under Section 12A of the Insolvency and Bankruptcy Code (IBC). It outlines three phases for withdrawal: before admission, after admission but before the Committee of Creditors (CoC) is constituted, and after CoC constitution. Regulation 30A of the CIRP Regulations governs this process, requiring 90% CoC approval for withdrawals after CoC formation. The Supreme Court's ruling in the Byju’s case (GLAS Trust Company LLC v. Byju Raveendran) emphasized that post-admission settlements must follow the statutory framework under Section 12A and cannot override collective creditor interests through private bilateral agreements. The article also discusses the NCLAT's recent pronouncement on factors influencing settlement decisions and clarifies that Section 12A cannot be invoked after the commencement of liquidation proceedings.
(Source：Ibclaw)