NCLAT order on insolvency fraud may cloud IBC interpretation: Experts

Experts say NCLAT's order allowing recall of resolution plans if fraud is detected could weaken bidder confidence and blur clarity on the Insolvency and Bankruptcy Code

The National Company Law Appellate Tribunal (NCLAT) in the case Expert Realty Professionals Private Limited vs Logix Infrastructure Private Limited upheld the National Company Law Tribunal’s (NCLT’s) authority to recall a resolution plan at any stage if fraud was detected during the insolvency process.

 

According to experts, the order could create uncertainty in interpreting the Insolvency and Bankruptcy Code (IBC), particularly given the Supreme Court’s (SC’s) emphasis on the primacy of lenders’ commercial wisdom in insolvency proceedings. “Fraudulent intent is a dangerously wide umbrella. If stretched too far, it undermines the finality that the SC has sought to protect. While