Payment of Pre-CIRP Dues To Creditors Including Govt Dues Cannot Be Made By RP Outside Resolution Framework: NCLAT

The National Company Law Appellate Tribunal (NCLAT) has ruled that the payment of pre-CIRP dues to creditors, including government dues, cannot be made by the Resolution Professional (RP) outside the resolution framework. The case involved a company undergoing the Corporate Insolvency Resolution Process (CIRP), where the RP had made payments to certain creditors outside the approved resolution plan. The NCLAT held that such payments are not permissible and must be made strictly within the framework of the resolution plan approved by the Committee of Creditors (CoC). This ruling emphasizes the importance of adhering to the resolution framework and ensures that all creditors are treated equitably. It also provides clarity on the role and responsibilities of the RP in managing the company’s finances during the CIRP. The decision reinforces the principles of transparency and fairness in the insolvency process.