A Scheme of Compromise and Arrangement under Section 230 of the Companies Act, 2013, read with Regulation 2B of the Liquidation Regulations, has today emerged as a preferred alternative for timely resolution of a Corporate Debtor ("CD") in liquidation. It maximises value for stakeholders by leveraging existing approvals, permissions and contractual arrangements, rather than resorting to sale of the CD as a going concern — a route earlier available under Regulation 39C of the CIRP Regulations read with Regulation 32(e), (f) and 32A of the Liquidation Regulations.
That earlier route no longer exists. The IBBI (Liquidation Process) (Second Amendment) Regulations, 2025, effective 14.10.2025, omitted Regulation 32A and the going-concern sale mechanism. Notification No. IBBI/2025-26/GN/REG130 of the same date omitted Regulation 39C of the CIRP Regulations. Consequently, wherever a going-concern sale had not already commenced, it is no longer legally possible for the Liquidator or the Stakeholders' Consultation Committee ("SCC") to give effect to an earlier CoC recommendation for such a sale — that route stands prospectively removed by law. In this changed landscape, a Section 230 scheme remains the only legal mechanism through which a CD in liquidation may continue as a going concern rather than being dismantled through piecemeal asset sales.
Regulation 2B(1) requires a scheme to be completed within 90 days of the liquidation order. The NCLAT in M/s Prakash Oil Depot v. G. Madhusudhan Rao & Anr. (Company Appeal (AT)(CH)(Ins) No. 304/2025) held this timeline to be directory, not mandatory, and extendable by the Adjudicating Authority. Similarly, in Shahid Ali v. Kuldeep Verma & Ors. (Company Appeal (AT)(Ins.) No. 655 of 2025), the NCLAT held that a scheme may be pursued even absent a prior Regulation 39BA recommendation by the CoC, subject to leave of the Tribunal, and that the CoC's failure to recommend a scheme during CIRP does not bar the SCC from considering one during liquidation. The opportunity for revival is not foreclosed merely because it went unexplored earlier.
Once the Adjudicating Authority grants leave, the SCC is not confined to the proposal first received. Additional schemes may be invited from the public through an Expression of Interest ("EOI") published in newspapers, with all resulting proposals placed before the SCC — ensuring a transparent, competitive process for securing the most viable revival scheme, rather than a negotiation confined to a single proposer.
In Y. Shivram Prasad v. S. Dhanapal & Ors. [Company Appeal (AT)(Ins.) No. 224/2018], the NCLAT held that the NCLT plays a dual role when passing an order under Section 230 — as Adjudicating Authority supervising liquidation, and as the Tribunal sanctioning the scheme — and that any scheme must adhere to the Code's principles and maximise value while balancing stakeholder interests. The Supreme Court in Arun Kumar Jagatramka v. Jindal Steel and Power Ltd. [Civil Appeal No. 9664/2019] held that the Section 29A bar on erstwhile management applies equally to Section 230 schemes, precluding a "back-door entry." Drawing on S.C. Sekaran v. Amit Gupta & Ors. and the Supreme Court's decision in Meghal Homes Pvt. Ltd. v. Shree Niwas Girni K.K. Samiti & Ors. [(2007) 7 SCC 753], the NCLAT clarified that Section 230 exists to secure genuine revival and better realisation for stakeholders — not a disguised return of the CD to its erstwhile promoters — and directed liquidators to exhaust such options before resorting to asset sale.
Maintaining a CD as a going concern often escalated costs when repeated sale attempts failed, and liquidators routinely sought reliefs from the Adjudicating Authority that the Code did not contemplate, producing litigation and delay. Once a reserve price was disclosed after a failed auction, bidders would strategically await further reductions, depressing realisations below liquidation value. A scheme of compromise avoids this value erosion and improves creditor recoveries.
The NCLT, Indore Bench's order dated 30.04.2026 in AAA Insolvency Professionals LLP (Liquidator of Chinar Realty Pvt Ltd), IA (I.B.C)/85(MP)2026 in CP(IB) No. 53 of 2023 — argued by the author of this article — illustrates this framework in practice and confirms that schemes may indeed be solicited from the public at large.
The CoC had, on 23.12.2024, voted for liquidation while expressing a wish that the Liquidator first explore going-concern sale — then available under Regulation 39C — but made no Regulation 39BA recommendation for a Section 230 scheme. Liquidation was ordered on 11.06.2025; following appellate proceedings before the NCLAT, the Applicant was appointed Liquidator only on 19.12.2025. On 16.01.2026, a scheme for revival was received from third parties — not being members of the company or its creditors — backed by a ₹5 crore EMD, for a residential project of which only one of five phases stood complete. The SCC, with a 96.54% majority, authorised the Liquidator to seek NCLT leave both to pursue the scheme and to publish an EOI inviting proposals from eligible persons and entities in the public at large.
The Tribunal held that Section 60(5) confers wide jurisdiction to be exercised in a manner preserving maximum value, per Fivebro Water Services Pvt. Ltd. v. Bijay Murmuria [Company Appeal (AT)(Insolvency) No. 1730 of 2025]. It found the absence of a Regulation 39BA recommendation no absolute bar, following Shahid Ali, particularly since the CoC's original preference for going-concern sale became impossible only because of the intervening 14.10.2025 amendment — it would be inequitable for that omission to now extinguish the sole remaining route to revival. On limitation, the Tribunal held the 90-day period directory, condoning delay attributable to appellate proceedings beyond the Liquidator's control, consistent with Y. Shivram Prasad and Prakash Oil Depot. On merits, it found piecemeal sale impracticable: the land belonged to third parties, not the CD; statutory approvals sat solely in the CD's name and were not freely transferable; and existing homebuyer allotments created third-party rights that piecemeal disposal would imperil.
Granting leave, the Tribunal permitted the Liquidator to publish an EOI inviting compromise/arrangement schemes from the public at large — not merely to negotiate the proposal of the third-party scheme proposer — subject to Section 29A eligibility screening, with all compliant proposals placed before the SCC for evaluation and recommendation. It clarified that this leave to pursue the process does not bind the Tribunal to eventually sanction any particular scheme, and directed 30-day progress reporting.
With the going-concern sale mechanism now legislatively removed, Section 230 has become the principal — and judicially endorsed — vehicle for reviving a Corporate Debtor in liquidation. The Chinar Realty order confirms two propositions of practical importance: first, that the statutory changes of October 2025 do not leave liquidation estates without a value-maximising alternative, since a Section 230 scheme fills that void; and second, that the process is not confined to whichever proposal first reaches the Liquidator's desk. An Adjudicating Authority may, and in appropriate cases should, direct that the market be tested through a public EOI, ensuring the scheme finally placed for sanction is the product of a transparent and competitive process — thereby safeguarding the Code's core objective of value maximisation and balanced treatment of all stakeholders.