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This could also create a positive shift in resuscitating the debt-ridden company through a settlement process as opposed to resolution and give more options to lenders, experts said.

вЂњGiven this decision, the CoC can now, in parallel with the CIRP (corporate insolvency resolution process), also try and negotiate a settlement with the promoters.вЂќ вЂњEarlier, once the admission order was passed in respect of a corporate debtor, the promoters were ousted from the control and management of the company and had no active role in the resolution process,вЂќ said Udit Mendiratta, partner at Argus Partners (Solicitors & Advocates). Vallal had then moved the Supreme Court.ДЄccording to experts, the apex courtвЂ™s decision gives lenders more flexibility to arrive at a settlement even after the corporate insolvency process is initiated and is at an advanced stage. In January this year the NCLAT also upheld the NCLT order for liquidation. However, the NCLT rejected the settlement offer in August 2021, causing promoter Vallal RCK, SivasankaranвЂ™s father and a shareholder of the company, to move the NCLAT. In April 2021, Sivasankaran managed to convince more than 90 percent of SIHLвЂ™s lenders to withdraw the company from the corporate insolvency resolution process and go in for a one-time settlement of Rs 328.21 crore to lenders under a settlement plan involving a haircut of about 93.5 percent for lenders. According to Sonam Chandwani, managing partner at KS Legal and Associates, the premise that financial creditors are fully informed about the viability of the corporate debtor and the feasibility of the proposed resolution plan has been upheld. вЂњSettlement is largely preferred than liquidation in most cases where bidders are absent.вЂќ вЂњThe bankersвЂ™ consortium is relieved that the settlement amount of Siva Industries is slightly higher than the liquidation value of the firm,вЂќ said a banker in the stressed assets vertical of a private lender that has exposure to the company.

Therefore, neither the learned National Company Law Appellate Tribunal (NCLAT) nor the National Company Law Tribunal (NCLT) wereВ justifiedВ inВ notВ givingВ due weightage to the commercial wisdom of the CoC, the court observed.

In a 21-page written orderВ dated June 3В regarding the Siva Industries case, the Supreme Court said that the committee of creditors (CoC) had due deliberation to consider the pros and cons of the settlement plan and took a decision exercising their вЂњcommercial wisdomвЂќ.

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