Group Insolvency Under IBC: NCLAT Clears First Consolidated Resolution Plan Covering Six Companies

NEW DELHI — The National Company Law Appellate Tribunal has upheld a single resolution plan for a real estate group and five of its subsidiaries, the first time the appellate tribunal has approved the consolidated resolution of an entire group in the sector and the clearest endorsement yet of substantive consolidation under the Insolvency and Bankruptcy Code, 2016. The Principal Bench dismissed an appeal by a dissenting lender on 17 October in Re: Trident Infra Group, affirming the approval granted by the NCLT earlier this year.

"Creditors lent to the group. Resolving one company at a time was never going to work," the bench said.

What the plan does

The group developed eleven residential and commercial projects in the National Capital Region through project-specific subsidiaries, with land held in some entities, construction contracts in others and customer receipts pooled at the holding company. Each company was admitted into the corporate insolvency resolution process between 2023 and 2024 on applications by lenders and homebuyers, and a common resolution professional was appointed. The committees of creditors of the six companies, meeting jointly, approved a single plan under which one resolution applicant takes over the entire estate, completes the projects, honours the allotments of roughly 4,200 homebuyers, and distributes recoveries to financial creditors under a consolidated waterfall. The NCLT approved the plan under Section 31; one lender to a land-holding subsidiary appealed.

Group insolvency under the IBC: the law so far

The Code, as enacted, said nothing about groups. Each company is a separate corporate debtor with its own process, its own committee and its own plan, and the tribunals built the concept of group resolution case by case:

• Videocon (2019). NCLT Mumbai ordered the substantive consolidation of thirteen of the fifteen Videocon group companies, identifying the factors that justify it — common control, common directors, common assets and liabilities, inter-dependence, pooling of resources, co-existence of assets, intricate links between the companies, cross-shareholding and common lenders — while excluding two companies that could stand alone.
• Edelweiss ARC v. Sachet Infrastructure (2019). The NCLAT directed the joint insolvency of five real estate companies developing a single township, with one resolution professional and a combined committee.
• The 2019 working group. A committee chaired by U.K. Sinha recommended a statutory framework built on procedural coordination — a single bench, a common professional and information sharing — with substantive consolidation reserved for exceptional cases.
• The 2026 amendment. The Insolvency and Bankruptcy Code (Amendment) Bill, introduced in August 2025 and passed by Parliament in 2026 after a select committee's report, inserted an enabling framework under which the Union may prescribe rules for common benches, common resolution professionals and joint committees of creditors for domestic groups. The tribunal recorded that the plan before it was formulated under the existing jurisprudence and that the new framework supplements rather than displaces it.

What the tribunal held

1. The consolidation factors were met. The companies shared directors, bank accounts and project teams; customer receipts for one project funded construction in another; every lender held guarantees or security across several companies. Separate resolution would have required each plan to depend on the others, with no mechanism to make them consistent.
2. The approvals were valid. Each committee approved the plan with more than 66 per cent of voting share, and the joint committee did so as well. The tribunal relied on K. Sashidhar v. Indian Overseas Bank (2019) and Essar Steel (2019) for the proposition that the commercial decision of the committee is not open to review on merits.
3. The dissenter is protected. The appellant argued that the land parcel securing its loan would have fetched more in a standalone liquidation of the subsidiary. The tribunal held that Section 30(2)(b) guarantees a dissenting financial creditor the liquidation value of its claim, that the liquidation value had been computed by two registered valuers on the consolidated estate, and that the plan paid the appellant more than that floor.
4. Jurisdiction exists. The NCLT's power to consolidate flows from Section 60(5), which gives it jurisdiction over any question arising out of the insolvency of a corporate debtor, read with its inherent powers under Rule 11 of the NCLT Rules, 2016.

Creditors lent to the group. Resolving one company at a time was never going to work.

From the judgment

Why real estate groups are the test case

Developers build each project in a separate company to ring-fence risk and raise project-level finance, then undo the ring-fencing in practice by moving money between projects. When the group fails, the separateness that was convenient in good times becomes an obstacle: homebuyers in a completed project are creditors of one company, the land is in another, and the money is in a third. Earlier insolvencies of large developers produced ad hoc solutions — project-wise processes, court-appointed monitoring and, in one case, a "reverse" process in which the promoter funded completion under supervision. The present order goes the other way: one estate, one plan, one applicant.

What it means

• For lenders: cross-guarantees and cross-collateral make consolidation more likely, and the liquidation-value floor will be computed on the consolidated estate. Lenders whose security is confined to one entity should model both outcomes before voting.
• For homebuyers: a consolidated plan can complete a stalled project with the receipts of a healthy one; allottees vote through their authorised representative in each committee and in the joint committee.
• For resolution applicants: a group acquisition under one plan, with a single Section 31 approval, is now a tested route. Due diligence must cover every entity in the consolidation.
• For promoters: Section 29A disqualifications are assessed across the group; a promoter ineligible for one company is ineligible for the consolidated plan.

Timeline

• Aug 2019 — NCLT Mumbai orders substantive consolidation of Videocon group companies.
• Sept 2019 — Working group on group insolvency recommends a statutory framework.
• 2023–24 — Six group companies admitted into CIRP; common resolution professional appointed.
• 12 Aug 2025 — IBC (Amendment) Bill introduced in the Lok Sabha; referred to a select committee.
• 2026 — Parliament passes the amendment, including the enabling group-insolvency framework; NCLT approves the consolidated plan.
• 17 Oct 2026 — NCLAT dismisses the dissenting lender's appeal.

The Counsel will report any appeal to the Supreme Court under Section 62 of the Code. Lenders, allottees and bidders dealing with a stressed group should take advice from a qualified insolvency practitioner on how consolidation affects their position.

This report is for general information only and does not constitute legal advice. Readers should consult a qualified lawyer about their own circumstances. Case citations are to The Counsel Reports (TCR) unless otherwise stated.