NCLAT upholds Resolution Plan Proposing ‘Nil’ Payment to Operational Creditors

The National Company Law Appellate Tribunal (NCLAT) upheld a resolution plan that proposed nil payment to operational creditors. The resolution plan, approved by the Committee of Creditors (CoC), prioritized financial creditors over operational creditors, leading to objections from the latter. The NCLAT ruled that the resolution plan was in compliance with the Insolvency and Bankruptcy Code (IBC) and that the CoC’s commercial wisdom could not be questioned. This decision underscores the primacy of financial creditors in insolvency proceedings and highlights the challenges faced by operational creditors in recovering dues under the IBC framework.