🔍 What Happened

The **National Company Law Appellate Tribunal (NCLAT) set aside an NCLT order that added a condition requiring 5% of equity in an MSME resolution plan to be reserved for public shareholders.

🧾 Summary

In a key insolvency ruling affecting MSME resolution plans under the Insolvency and Bankruptcy Code, 2016, the NCLAT held that insolvency courts cannot impose new conditions on corporate resolution plans that were not proposed by the resolution applicant or agreed by lenders. The appellate tribunal struck down an NCLT modification that sought to reserve 5% equity for public shareholders in an MSME’s resolution plan. The bench said such conditions effectively alter terms already negotiated and approved by financial creditors, which could upset commercial certainty and creditor rights. The decision reinforces that insolvency tribunals must stay within statutory limits while evaluating resolution plans.

🟢 Public Takeaway

For MSMEs and creditors, an insolvency plan approved by lenders can’t be changed by courts to add new conditions — offering more predictability for job security and business continuity.