The resolution of DHFL — once among India's largest housing finance companies, and one of its most spectacular corporate failures — produced a plan that assigned all future recoveries from fraudulent transactions to Piramal Capital, the successful resolution applicant. The valuation attached to those recoveries: one rupee.

That the Committee of Creditors, representing financial institutions that had already written off enormous sums, should assign a nominal value to uncertain future litigation outcomes and transfer the upside to the incoming acquirer is, on reflection, unsurprising. What is more surprising is that it took the Supreme Court's April 2025 judgment in Piramal v. 63 Moons to say, definitively, that it was also lawful.

The Question That Was Actually at Stake

The objection raised by 63 Moons Technologies — representing fixed deposit holders who had watched their claims take a substantial haircut — was not without surface force. Thousands of crores in potential Section 66 recoveries, representing the residue of what investigators had found to be deliberate fraud, were being transferred to Piramal for a rupee. The NCLAT agreed the valuation was unreasonable and sent the plan back for repricing. The Supreme Court reversed that decision, and in doing so, settled something that had been unsettled for several years.

Section 66 of the IBC allows the corporate debtor to claw back transactions entered into with intent to defraud creditors. In a company the size of DHFL, those recoveries could be substantial. They were also deeply uncertain — years of litigation, multiple jurisdictions, outcomes that would not be known for years after the plan closed. How should they be valued? And who should receive the benefit of them? The IBC does not answer those questions directly. It leaves them to the Committee of Creditors.

What the CoC Chose to Do

The CoC made a commercial judgment: it priced the uncertain future recoveries at one rupee and assigned them to Piramal as part of the plan's overall economics. This is not, in the context of how resolution economics work, a remarkable choice. Contingent litigation recoveries that may materialise over years, subject to appeals and reversals and enforcement difficulties, are routinely discounted in distressed transactions across jurisdictions. What was remarkable was that a tribunal above the CoC felt entitled to undo the choice.

What the Supreme Court Settled

The Court held on two points that go on to affect every large resolution that comes after this one. First, Section 66 recoveries are assets of the corporate debtor, and the IBC does not prohibit a resolution plan from allocating those recoveries to the successful applicant as part of the plan's overall economics. Second — and this is the point that matters as much as the first — the question of what valuation to assign, and whether to pass the upside to the applicant rather than distribute it among creditors, is a commercial one, not a legal one. The NCLAT had no jurisdiction to reopen it.

The IBC's architecture rests on a foundational principle: commercial decisions within the resolution process are the province of the Committee of Creditors, and the Adjudicating Authority's role under Section 30(2) is confined to verifying statutory compliance — not substituting its own economic judgment for that of the creditors. The "commercial wisdom" doctrine had been articulated before. But it had never been applied as squarely to the valuation of avoidance actions as it was in Piramal.

Why the Ruling Changes the Terrain

For dissenting creditors, the ruling effectively closes the valuation route of challenge. The statutory grounds under Section 30(2) remain, but they are narrow: priority of payment, compliance with the Code, treatment of operational creditors. A creditor who believes the plan's economics were unfair to it cannot, by reason of that belief alone, unwind the plan. The CoC's authority, as the Court put it, is a jurisdictional boundary — not merely a practical default.

For resolution applicants, the ruling restores something that had become uncertain. When you bid on a stressed corporate debtor, you are pricing the whole asset — including the contingent future recoveries. If those recoveries are stripped out and returned to creditors, the bid economics change fundamentally. The Court has confirmed that plans can legitimately fold avoidance-action upside into the applicant's consideration. The uncertainty that had, quietly, begun to discount the value of avoidance-action upside in resolution bids is now resolved.

The Takeaway

If you are preparing a resolution plan, the valuation of avoidance-action recoveries is now firmly within the CoC's discretion. If you are a dissenting creditor, the route to overturning a plan on valuation grounds has effectively closed.

The economics of IBC bids will be priced accordingly, as they already have been — quietly, in every major resolution since.