Section 32 of IBC : Section 32: Appeal

Explanation using Example

Imagine a company, XYZ Pvt. Ltd., is undergoing a corporate insolvency resolution process (CIRP) because it failed to pay its debts. A resolution plan is proposed by a potential investor and after negotiations, the Committee of Creditors (CoC) approves the plan. The plan is then submitted to the National Company Law Tribunal (NCLT), which also approves it. However, one of the operational creditors, who is not satisfied with the payout proposed in the resolution plan, decides to challenge the NCLT's approval.

In this scenario, Section 32 of the Insolvency and Bankruptcy Code, 2016, would apply. The operational creditor would have to file an appeal in accordance with the manner and on the grounds provided in sub-section (3) of section 61 of the Code. This means the appeal must be filed within the stipulated time frame of 30 days (extendable by 15 days in certain situations) and must show that there was material irregularity or fraud affecting the decision of the CoC, or that the approved resolution plan is in contravention of the provisions of the law.