Bhushan Power & Steel IBC Resolution Upheld
In News
What Happened
Why It Matters
Background
History & Context
What Changed
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BEFORE: The May 2025 ruling declared that the Committee of Creditors (CoC) becomes 'functus officio' (lacks further authority) once the NCLT approves a resolution plan. NOW: The Supreme Court clarified that the CoC continues to exist and function until the resolution plan is completely implemented and all legal challenges attain finality.
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BEFORE: Lower courts and previous rulings entertained appeals regarding the distribution of interim profits (EBITDA) generated during the insolvency process, overriding creditor decisions. NOW: The court reaffirmed that the commercial wisdom of the CoC regarding the distribution of funds, including EBITDA, cannot be interfered with by the judiciary.
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BEFORE: The earlier judgment suggested procedural delays could result in forced liquidation under the strict 330-day IBC timeline. NOW: The court adopted a pragmatic approach, holding that delays caused by extraneous circumstances (like asset attachments by the Enforcement Directorate) should not automatically derail a successful corporate revival.
Prelims Angle
NCERT Connection
Practice Questions
Q1
Correct Statement(s)Which of the following statements regarding the Supreme Court's September 2025 judgment in the Bhushan Power and Steel Ltd (BPSL) insolvency case is/are correct? 1. The Supreme Court ruled that the Committee of Creditors (CoC) becomes 'functus officio' immediately after the NCLT approves the resolution plan. 2. The judgment reaffirmed the principle that the commercial wisdom of the CoC is supreme and cannot be lightly interfered with by judicial authorities.