IBC Is Not a Recovery Tool

This decision is a classic reaffirmation of the settled IBC principle that the Adjudicating Authority is not required to examine business viability, equity, or recovery alternatives once default is established.

The NCLT Indore Bench, while considering multiple defenses raised by the Corporate Debtor, ranging from ongoing operations, restructuring proposals, and alleged suppression of facts, held that none of these override the core test under Section 7, existence of financial debt and occurrence of default.

The Tribunal decisively clarified that temporary reliefs such as “holding-on operations” do not erase default, nor do parallel proceedings under SARFAESI bar insolvency initiation. 

By admitting CIRP, the Bench reinforces that IBC is a resolution mechanism triggered by objective financial failure, not a forum for negotiating commercial disputes once default is crystallized.