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In a widely reported order, the Supreme Court allowed a debtor to settle a claim with a creditor after the collective resolution process was triggered under the Insolvency and Bankruptcy Code (IBC), 2016. The short story of the litigation leading up to the Supreme Court order is as follows. In June 2017, the National Company Law Tribunal (NCLT), the adjudicating tribunal under the IBC, had admitted an application for triggering the IBC against a debtor. Thereafter, the debtor and the creditor who had applied for triggering the IBC, settled their claim. The debtor appealed to the National Company Law Appellate Tribunal (NCLAT) to set aside the order of the NCLT that triggered the IBC. At the NCLAT, both the debtor and the creditor acknowledged that their claim had been settled.
The NCLAT dismissed the appeal on two grounds. One, that after the IBC was triggered, there was no provision in the IBC to allow the creditor to withdraw her application for triggering it o
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