The Supreme Court’s decision in the Bhushan Power & Steel Ltd. (BPSL) case marks one of the most influential judgments in the evolution of India’s Insolvency and Bankruptcy Code (IBC). The Court reaffirmed that once a resolution plan is approved by the Adjudicating Authority, all past claims, liabilities, investigations, and prosecutions against the corporate debtor stand extinguished, unless explicitly preserved in the plan. This ensures that the corporate debtor gets a completely “clean slate” after resolution—one of the core principles envisioned under the IBC.
This ruling brings greater confidence to investors and resolution applicants by guaranteeing finality and stability in the insolvency process. It prevents agencies or departments from reopening old disputes after the takeover, ensuring that the successful resolution applicant does not inherit historical issues. The judgment also strengthens the position of the Committee of Creditors (CoC) and supports the legislative intent of value maximization by removing uncertainties that could discourage potential bidders.
Overall, the BPSL verdict enhances the effectiveness of the Corporate Insolvency Resolution Process (CIRP). It reduces litigation risk, promotes faster revival of stressed companies, and reinforces the IBC’s objective of giving resolution applicants a transparent and reliable environment. The decision is widely seen as a major step toward improving India’s insolvency landscape and attracting stronger participation in resolution processes.
