Commercial wisdom

Commercial wisdom is the phrase the courts use for the committee of creditors' judgement on whether a resolution plan under the Insolvency and Bankruptcy Code, 2016 is worth approving: its view of feasibility, value and distribution. The principle is that the adjudicating authority checks a plan against the Code but does not substitute its own view of the commercial bargain.

The principle survived a challenge in 2025. In Kalyani Transco v. Bhushan Power and Steel Ltd., the Supreme Court rejected an approved plan on 2 May 2025, recalled that judgment on review on 31 July 2025, and on rehearing, in 2025 INSC 1165, restored the settled position. In M/s Tata Steel Ltd. v. Varsha, decided on 17 July 2026, the Court carried the same logic to claims, holding that proceedings not crystallised into quantifiable claims by the date of approval stand extinguished. Our reading, as at 21 September 2026, is that this is a settled line.