Liquidation Value vs. Bid: Supreme Court Ruling

Quick Summary

The Supreme Court has ruled that a bid submitted under the Corporate Insolvency Resolution Process (CIRP) does not need to match the liquidation value of the assets. In this case, the National Company Law Appellate Tribunal (NCLAT) had ordered a resolution applicant to increase their bid to match the liquidation value, but the Supreme Court overturned this decision. The apex court stated that the purpose of liquidation value is to aid the Committee of Creditors in decision-making, not to mandate a minimum bid amount.

Court :
Supreme Court of India

Brief :
The Adjudicating Authority, the National Company Law Tribunal, Hyderabad Bench (NCLT), on January 21, 2019 approved MSL's resolution plan, which among other things involved an upfront payment of Rs 477 crores. While approving the resolution plan, the NCLT said that it met all the requirements of Section 30(2) of the Code which primarily deals with payment to creditors.

Citation :
Maharasthra Seamless Ltd. v. Padmanabhan Venkatesh [2020] 113

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