Venus Recruiters' case, the fate of avoidance applications and possible solutions

A. Introduction:

Much has already been written on the ratio of the Venus Recruiters Private Limited Vs Union of India & Ors¹ and its impact². In brief, in this case, a single Judge of the Delhi High Court observed that in the context of prosecution of avoidance applications³, once the resolution plan is approved by the Adjudicating Authority ("AA") under the Insolvency and Bankruptcy Code 2016 ("Insolvency Code"), the corporate insolvency resolution process ("CIRP") comes to an end; and consequently, the resolution professional ("RP") cannot continue to exercise any authority whatsoever. As a result, the avoidance applications would not survive. In this note, we discuss the importance of avoidance applications, the exceptions carved out by this case, and suggest practical solutions to use these exceptions.