Tribunal permits re-initiation of CIRP with fresh Form G issuance after rejecting earlier resolution plans; emphasises transparency and statutory compliance in fresh process
In a significant decision dated October 13, 2026, the National Company Law Tribunal (NCLT), Mumbai Bench, presided by Mr. Anil Raj Chellan (Member Technical) and Mr. K.R. Saji Kumar (Member Judicial), allowed the Committee of Creditors (CoC) of Somerset Constructions Private Limited to restart the Corporate Insolvency Resolution Process (CIRP) with a fresh invitation for resolution plans through issuance of a new Form G. This order also regularised the CIRP period from April 22, 2024, to the date of the order, October 13, 2026, and granted an additional 120 days for completion of the fresh resolution process.
Background:
Somerset Constructions was admitted into CIRP on July 25, 2023, following a petition by Unity Small Finance Bank Limited, the initial financial creditor and sole member of the CoC. Over the course of the CIRP, four resolution plans were received, deliberated, and revised. However, none of these plans were accepted by the CoC, which later underwent reconstitution after the financial debt was assigned to CFM Asset Reconstruction Private Limited in March 2025.
The newly constituted CoC after reviewing the earlier plans was not inclined to accept them, asserting that the bids were below the liquidation value and did not reflect the true market or intrinsic value of Somerset's assets. The CoC claimed to have received fresh expressions of interest indicating substantially higher potential resolutions in the range of Rs.180 to Rs.200 crore.
Legal Contentions:
The CoC and the Resolution Professional (RP) filed applications seeking extension of the CIRP timeline and permission to re-run the resolution process from the stage of publishing a fresh Form G. They relied on informal communications received from third parties after the CIRP timeline had expired, which purportedly showed potential for better resolution values.
Opposing this, Mr. Venkatavarathan Narasimhan Iyengar, a suspended director of Somerset Constructions, intervened to challenge the maintainability of the extension applications. He contended that communications from entities that had not participated in the earlier CIRP, had not submitted Expressions of Interest, and were received after the CIRP expiry cannot be treated as resolution plans. He further questioned the financial credibility of such entities and argued that reopening the process on such grounds would undermine the statutory framework and timelines under the Insolvency and Bankruptcy Code, 2016 (IBC).
Tribunal's Analysis and Findings:
The NCLT acknowledged the intervener's contention that the post-CIRP communications could not be treated as resolution plans under the Code. However, the tribunal emphasized that this did not preclude the possibility of conducting a fresh, transparent, and open resolution process compliant with the statutory framework.
The tribunal highlighted the time-bound nature of CIRP and the necessity to avoid indefinite or repeated extensions without cause. Yet, given the peculiar facts-namely, that earlier resolution plans were not accepted and the newly constituted CoC had not participated in the earlier process-the tribunal found it justifiable to permit a fresh resolution process to maximize the value of the corporate debtor.
The tribunal regularised the CIRP period from April 22, 2024, to October 13, 2026, recognizing the pendency of applications and proceedings during this interval. It then granted a prospective period of 120 days from the date of the order for the RP and CoC to complete the fresh CIRP process, including issuing a fresh Form G, inviting Expressions of Interest, and completing subsequent procedural stages.
The order explicitly states that no preferential rights or advantages would accrue to any party, including those who had submitted informal communications prior to the fresh Form G. The RP was directed to conduct due diligence on all prospective applicants, scrutinizing eligibility, financial capacity, source of funds, and implementation capability as per the IBC and CIRP Regulations.
Significance:
This judgment clarifies that while informal or belated expressions of interest do not qualify as resolution plans, the NCLT can, in exceptional circumstances, regularise the CIRP timeline and permit a fresh resolution process to maximize creditor recovery and asset value. The decision underscores the tribunal's balancing act between adhering to the statutory timelines and facilitating value maximisation through a transparent and equitable process.
The ruling also reiterates the importance of the commercial wisdom of the CoC in accepting resolution plans, while ensuring that this discretion operates strictly within the statutory framework provided by the IBC.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Communications received from entities which had not participated in earlier CIRP and were received after expiry of CIRP timeline cannot be treated as resolution plans - However, in peculiar facts, NCLT can regularise intervening period and permit fresh CIRP process by issuance of fresh Form G to secure value maximisation, provided process remains open, transparent, non-preferential and strictly compliant with statutory framework.
Statutory provision(s):
Section 60(5) of Insolvency and Bankruptcy Code, 2016; Rule 11 of National Company Law Tribunal Rules, 2016; Sections related to CIRP timelines and resolution plan process under the Insolvency and Bankruptcy Code, 2016.
