In Brief
The Supreme Court upheld the Committee of Creditors' commercial decisions in approving ArcelorMittal's resolution plan for Essar Steel. The Court ruled that the Committee has exclusive authority to determine how a resolution applicant's funds are distributed among creditors, including classifying secured and unsecured creditors separately. The Court rejected the NCLAT's mandate for equal treatment of all financial and operational creditors, holding that equitable treatment means treating similarly situated creditors fairly within their class, not identically across different classes. The Court also upheld the validity of the 2019 amendments to the Code, which clarify creditor classification and provide minimum guarantees to operational creditors and dissenting financial creditors. The Court set aside parts of the NCLAT judgment requiring equal distribution and allowing undecided claims post-approval, while confirming that an approved resolution plan binds all stakeholders, including guarantors.
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