Supreme Court Rules Repeated IBC Challenges by Unsuccessful Bidders Undermine Insolvency Code Framework

India's Supreme Court Upholds Resolution Plan of Sarda Energy & Minerals Ltd

Key Developments

• The Supreme Court of India has dismissed appeals filed by Torrent Power Ltd, Jindal Power Ltd, and Vantage Point Asset Management against the approval of Sarda Energy & Minerals Ltd's resolution plan for SKS Power Generation (Chhattisgarh) Ltd.
• The court upheld the resolution plan, which was approved by the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT), and implemented in accordance with the law.

Insolvency Proceedings

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• The insolvency proceedings against SKS Power Generation (Chhattisgarh) Ltd were initiated by Bank of Baroda in April 2022, after admitted claims of ₹2,560 crore.
• Sarda Energy & Minerals Ltd's resolution plan was approved by the NCLT on 13 August 2024, covering nearly the entire amount of financial creditors' dues.

Company Overview

• Sarda Energy & Minerals Ltd is a flagship company of the Sarda Group, founded in 1973 and headquartered in Chhattisgarh.
• The company is among India's lowest-cost steel producers and one of the country's largest manufacturers and exporters of ferroalloys.

Resolution Plan Details

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• Sarda Energy & Minerals Ltd's resolution plan for SKS Power Generation (Chhattisgarh) Ltd was valued at ₹1,950 crore.
• The resolution plan was approved by the CoC and implemented in accordance with the law.

Impact on Insolvency Framework

• The Supreme Court's decision aims to prevent unsuccessful bidders from challenging commercial decisions taken by lenders, which undermines the design of India's bankruptcy framework.
• The court's observations emphasize the importance of a time-bound structure in the Insolvency and Bankruptcy Code (IBC) to prevent delay and promote efficient resolution.