Implications of Essar Steel Judgment under the Insolvency Code: "Does the Committee of Creditors stand supreme?”


SESSION: 04:00 PM - 05:30 PM (IST)

                06:30 PM - 08:00 PM (SGT)

                06:30 PM - 08:00 PM (HKT)

                10:30 AM - 12:00 PM (GMT)



The standing of financial creditors (“FC”) vis-à-vis themselves and then vis-à-vis operational creditors (“OC”) and correspondingly the distribution of resolution proceeds amongst creditors has been a subject of much debate for a company undergoing a resolution process under the Insolvency and Bankruptcy Code, 2016. The National Company Law Appellate Tribunal (NCLAT) through a series of judgments, culminating in the judgment passed in the CIRP of Essar Steel Limited created a lot of concern when ruling that all FCs have to be paid in proportion to the percentage of their debt to the total claims made by the FCs of the CD and no differentiation can be made between secured, unsecured, assenting and dissenting FCs in this regard notwithstanding inter-alia the priority of security. The NCLAT also held that the CoC does not have the ability to determine the manner in which resolution proceeds are to be distributed amongst various categories of creditors which would be the prerogative of the resolution applicant. Further, it was also held that that OC’s and FC’s should be paid the same amount, percentage wise, for a resolution plan to be considered as fair and equitable.

This aforementioned propositions were under challenge before the Supreme Court, wherein the Supreme Court overruled the judgment passed by the NCLAT (“Judgment”). In the same proceedings the Supreme Court was also considering the constitutional validity of the 2019 Amendment to the IBC (“Amendment Act”).

The Judgment provides much required clarity and certainty in respect of the manner of distribution of resolution proceeds under the IBC and the powers of the COC as well as the NCLT/NCLAT in respect of the same. However, there are certain aspects of the Judgment which might require further deliberation and interpretation by adjudicatory forums, like (a) manner of payments for OCs and power to determine the same and (b) ability to extinguish undecided claims by a resolution applicant.

A link to the webinar is available here.

We cordially invite you to be a part of an interactive webinar on November 21, 2019 (Thursday) where we will be analysing the Judgment and the possible impact of the same on creditors, investors and litigants.

Focus Area

This webinar will focus on the various commercial and practical implications of the Judgment. In particular, we shall focus on:

  1. Role of the COC in determining the manner of distribution of resolution proceeds amongst various categories of creditors.
  2. Power of the NCLT / NCLAT vis-à-vis an approved Resolution Plan.
  3. The differentiation between secured, unsecured and operational creditors and the payments potentially due to them.
  4. Impact of the timelines set out in the Amendment Act.
  5. Payments to be made in respect of undecided or uncrystallised claims
  6. The gaps that may still arise post the Judgment

Flow of the session

04:00 PM – 05:00 PM(IST) :

Panel Discussion

05:00 PM – 05:30 PM(IST) :

Q & A




Leader, International Litigation & Dispute Resolution Practice

Nishith Desai Associates

Vyapak Desai leads the International Litigation & Dispute Resolution Practice at Nishith Desai Associates. Vyapak is also a Senior Attorney in the Corporate and Securities Practice group at the firm. Vyapak is a Co-chair- Council of MCIA, Director of CIArb India Branch. He is listed on SIAC Panel of Arbitrators, LCIA Database of Arbitrators and BVI IAC Panel of Arbitrators.


Leader, Private Equity & Mergers & Acquisitions

Nishith Desai Associates

Simone is the Co-Head of Mergers & Acquisitions practice and Corporate Governance practice at the firm. Simone’s practice focuses on mergers and acquisitions, private equity and venture capital investments, domestic and international, and has advised a wide spectrum of clients, across several sectors


Senior Member, International Litigation & Dispute Resolution Practice

Nishith Desai Associates

Arjun Gupta is a Senior Member of the International Litigation & Dispute Resolution Practice at Nishith Desai Associates. He represents clients in a wide-range of services with a special focus on cutting edge cross-border and complex litigations and international commercial arbitrations. He is also an integral member of the Insolvency and bankruptcy practice.