- NCLT ordered liquidation of Hero Electric after creditors failed to approve a resolution plan before the CIRP deadline.
- The tribunal ruled liquidation can proceed under insolvency law even without a separate creditor vote.
The Hero Electric liquidation decision was issued on March 3 by the National Company Law Tribunal (NCLT) in New Delhi after the company’s insolvency resolution process concluded without creditor approval for a restructuring plan. The ruling followed several months of attempts to rescue the electric two-wheeler manufacturer through competitive bidding rounds. However, none of the proposals secured the minimum support required from lenders, bringing the corporate insolvency resolution process to an end and triggering the tribunal’s liquidation order.
Creditor deadlock blocks insolvency resolution
During the corporate insolvency resolution process, multiple bidders submitted proposals aimed at reviving the financially distressed electric vehicle manufacturer. Two competing plans reached the final voting stage, but the best-supported proposal secured only 47.66% approval from the Committee of Creditors. Under insolvency rules, a resolution plan must receive at least 66% creditor approval to be adopted. With lenders divided between supporting a restructuring plan and pushing for liquidation, the voting outcome left the process deadlocked.
NCLT interpretation of insolvency law
The tribunal clarified that once the CIRP timeline expires without an approved resolution plan, liquidation can be ordered under Section 33(1)(a) of the Insolvency and Bankruptcy Code. According to the ruling, a separate 66% creditor vote specifically approving liquidation is not required when the insolvency deadline has already passed. The NCLT directed that liquidation begin immediately under the applicable Liquidation Process Regulations and allowed creditors to submit claims again to the appointed liquidator while closing earlier claim-related applications.
Click above to visit the official source.