No Part Of Resolution Plan Can Be Given On Application Of Operational Creditor Till Plan Is Approved By Adjudicating Authority: NCLAT

The NCLAT clarified that no portion of a resolution plan submitted under the IBC can be distributed to operational creditors until the plan is formally approved by the adjudicating authority. The case arose from a dispute over the distribution of funds before the resolution plan's approval. The tribunal noted that premature disbursement could undermine the statutory process and create complications in the insolvency resolution framework. It stressed adherence to procedural timelines and emphasized the role of the adjudicating authority in ensuring compliance. This ruling reinforces the sanctity of the IBC process, providing a clear directive on the sequencing of approvals and fund disbursement. The decision aims to prevent procedural ambiguities and uphold the integrity of insolvency resolutions.