Application U/S 95 Cannot Be Rejected On Grounds Of Pendency Of One Time Settlement Proposal: NCLAT

The National Company Law Appellate Tribunal (NCLAT) ruled that an application under Section 95 of the Insolvency and Bankruptcy Code (IBC) cannot be rejected merely because a one-time settlement proposal is pending. The tribunal emphasized that the pendency of settlement discussions does not preclude creditors from initiating insolvency proceedings if legal conditions are met. The ruling provides clarity on the applicability of Section 95, which enables creditors to file applications against personal guarantors of corporate debtors. The NCLAT highlighted that settlement negotiations do not override statutory provisions, ensuring creditors' rights are safeguarded. This decision strengthens the IBC framework by reaffirming its role as a time-bound resolution mechanism, even amidst settlement efforts.