Antitrust Clearance Before Creditor Approval: The Supreme Court’s Overcorrection in AGI Greenpac

Introduction

The Supreme Court’s decision in AGI Greenpac v. Hindustan National Glass Industries has redrawn the contours of India’s insolvency process. For the first time, the Court has held that when a resolution plan qualifies as a “combination” under the Competition Act, 2002, it cannot even be placed before the Committee of Creditors (CoC) unless it has already secured Competition Commission of India (CCI) approval. In effect, creditors are prohibited from voting on any plan that lacks prior clearance.

At first glance, the ruling appears sensible: it avoids creditors approving a plan that regulators later strike down. But on closer inspection, the decision risks undermining the very foundation of the Insolvency and Bankruptcy Code, 2016 (IBC); speed, flexibility, and creditor primacy. By importing competition clearance into the earliest stages of insolvency, the Court has not merely synchronized two regimes; it has subordinated one to the pace of the other.

The Case And Its Reasoning

In AGI Greenpac, the CoC approved the bidder’s plan with a resounding 98% majority despite the absence of CCI clearance. Clearance did eventually arrive, but with significant modifications. The Supreme Court quashed the CoC’s approval, ruling that section 31(4) of the IBC makes prior regulatory approval mandatory. A plan awaiting clearance, it held, is not “complete” or “implementable.”

The Court stressed three themes: first, creditor deliberations must not be wasted on plans that may later be derailed; second, insolvency law cannot override competition concerns; and third, conditional approvals where creditors approve first and regulators adjust later are antithetical to the IBC’s objective of finality.

Why This Is An Overcorrection

While the desire for certainty is understandable, the ruling risks throwing the baby out with the bathwater. The IBC was crafted as a time-bound mechanism to rescue distressed assets within a maximum of 330 days. The CCI, by contrast, is not bound by such urgency; even “Phase I” reviews can take weeks, while complex “Phase II” cases can stretch to several months. By hardwiring CCI approval into the insolvency timeline, the Court has effectively outsourced part of the IBC’s clock to a regulator never designed for speed. The result is predictable: processes that were already struggling to meet deadlines will now slow further.

The Hidden Costs Of The Judgment

The ruling carries three deeper risks that are less obvious but more damaging.

1. Bidder Deterrence

   Large corporate groups with compliance teams may navigate pre-clearance; smaller domestic bidders and foreign investors may not. This narrows the bidder pool, reduces competition, and depresses value recovery for creditors. Ironically, a judgment meant to protect competition in product markets may reduce competition in the insolvency market itself.

2. Strategic Litigation

   Rival bidders may now weaponize the CCI process to stall competitors, filing objections or demanding remedies to buy time. Insolvency timelines could be gamed through regulatory tactics, creating fertile ground for delay.

3. Erosion Of Creditor Primacy

   The IBC is built on creditor democracy, the idea that commercial decisions belong to creditors, not courts or regulators. By requiring prior clearance, the Court has allowed the CCI to become a gatekeeper to even creditor deliberation. These risks inverting the hierarchy of insolvency law, with regulators holding the keys to creditor decision-making.

Summary Table: Hidden Costs

Comparative Lessons

Globally, insolvency and antitrust are coordinated, but not conflated. In the United States, antitrust clearance under the Hart–Scott–Rodino Act runs in parallel with bankruptcy court processes; creditors can vote, but closing is delayed until regulators approve. The European Commission also reviews insolvency-driven mergers but does not bar creditors from deliberating while clearance is pending. India’s approach post-AGI Greenpac is, therefore, an outlier: it front-loads clearance, sacrificing procedural efficiency in the name of certainty.

A Better Balance

The Court is correct that insolvency and competition cannot operate in silos. But the solution is not to stall creditor democracy until regulators finish their work. Instead, three reforms could restore balance.

Fast-Track CCI Review

A statutory 30-day timeline for IBC cases would harmonize the two regimes. Other regulators like SEBI in takeover regulations already provide expedited processing; the CCI should do the same.

Conditional Creditor Approvals

Creditors should be permitted to approve plans “subject to” CCI clearance, with an automatic fallback if clearance is denied. This preserves both speed and certainty without subordinating one process to the other.

Legislative Harmonization

Parliament should clarify section 31(4) of the IBC to allow conditional sequencing and prevent regulatory overhang from derailing insolvency timelines.

Proposed Reforms Table

Conclusion

AGI Greenpac is a cautionary tale of well-intentioned judicial intervention creating unintended consequences. By prioritizing regulatory certainty over procedural speed, the Court has arguably weakened the very competitiveness of the IBC that made it a model for reform worldwide. The irony is stark: a framework designed to maximize value quickly may now yield fewer bids, longer delays, and reduced recoveries.

The Supreme Court has locked the doors until the slowest regulator turns the key. Unless policymakers act to create fast-track clearances or conditional approvals, India risks losing the efficiency that once made its insolvency regime a global talking point.