Dissenting Financial Creditor

Whether distribution to Secured Creditor has to be made as per the admitted claim/debt or on the basis of security interest over assets of the Corporate Debtor – ICICI Bank Limited Vs. BKM Industries Ltd. – NCLAT New Delhi

In this case, Resolution Applicant had proposed that amount for payment towards secured creditors shall be distributed amongst them based on proportion of their admitted claim. The Appellant raised objection and claimed distribution as per security interest.

In this important decision, Hon’ble NCLAT held that:

(i) As per Section 53(1)(b), debt owed to a secured creditor has to be distributed equally between and amongst workmen’s dues and debts owed to a secured creditors. The debt owed to the secured creditor is a debt as admitted in the CIRP.
(ii) The distribution of the debt has to be as per the debt of the Financial Creditors.
(iii) The scheme of Section 53(1), clearly indicates distribution as per the debt and in the legislative scheme there is no scope of distribution of assets among the Financial Creditors as per security interest.
(iv) Vistra ITCL (India) (2023) ibclaw.in 62 SC judgment on Article 142 of the Constitution, which jurisdiction was exercised and ultimately the Hon’ble Supreme Court has held Vistra to be a secured creditor.
(v) Upheld the decision of the NCLT Kolkata Bench.

Whether distribution to Secured Creditor has to be made as per the admitted claim/debt or on the basis of security interest over assets of the Corporate Debtor – ICICI Bank Limited Vs. BKM Industries Ltd. – NCLAT New Delhi Read Post »

Whether the Appellant being dissenting secured Creditor is competent to challenge approval of Resolution Plan by filing the Appeal? – IDBI Bank Vs. Ms. Mamta Binani RP, Deccan Chronicle Holdings Ltd. – NCLAT New Delhi

NCLAT held that in view of the principle laid down in the two judgments, Indian Resurgence ARC Private Limited v. M/s Amit Metaliks Limited & Anr. and Jaypee Kensington Boulevard Apartments Welfare Association and Others v. NBCC (India) Limited and others, when the Appellant is dissenting Creditor, Appellant is not competent to challenge the approved Resolution Plan and file an Appeal under Section 61 of IBC before this Tribunal. Applying the principle laid down in the above judgments, we hold that the Appellant being a dissenting secured Financial Creditor is not entitled to challenge Resolution Plan on the ground of discrimination by filing separate Interlocutory Application without challenging the approved Resolution Plan. Accordingly, the point is held against the Appellant and in favour of the Respondent.

Whether the Appellant being dissenting secured Creditor is competent to challenge approval of Resolution Plan by filing the Appeal? – IDBI Bank Vs. Ms. Mamta Binani RP, Deccan Chronicle Holdings Ltd. – NCLAT New Delhi Read Post »

A dissenting financial creditor cannot file an application under Section 66 of IBC – Ambit Finvest Pvt. Ltd. Vs. Rakesh Niranjan Ranjan & Ors. – NCLT Mumbai Bench

Adjudicating Authority held that the application under section 66 is to be filed only by the resolution professional or the liquidator. Moreover, the applicant herein is not a resolution professional and is only a dissenting financial creditor and in this capacity the Applicant has no right to file the present application. In any case, the present application is liable to be dismissed on the ground of maintainability also, since the transactions which were mentioned in the application under section 47 and section 66 does not qualify the criteria of undervalued or fraudulent transaction. Under these circumstances, we are of the considered opinion that the instant Application is liable to be dismissed and accordingly stands dismissed.

A dissenting financial creditor cannot file an application under Section 66 of IBC – Ambit Finvest Pvt. Ltd. Vs. Rakesh Niranjan Ranjan & Ors. – NCLT Mumbai Bench Read Post »

No bar under IBC provisions for the CoC to call for a fresh valuation report – Indian Bank Vs. Charu Desai, Erstwhile RP & Chairman of Monitoring Committee of GB Global Ltd. & Anr. – NCLAT New Delhi

NCLAT observed that in the present case, earlier CIRP was completed by approval of Resolution Plan but Resolution Applicant could not implement the plan, hence, fresh process was started for inviting a fresh Resolution Plan. The earlier Resolution Applicant has run the Corporate Debtor for almost a year. It was noted by the CoC that there has been significant fall in the book value of the Corporate Debtor in the previous years. NCLAT viewed that the decision of CoC to obtain a fresh valuation of the Corporate Debtor as on 31.07.2020 could not be faulted nor it can be said to have contravened any provisions of the Code or Regulations.

No bar under IBC provisions for the CoC to call for a fresh valuation report – Indian Bank Vs. Charu Desai, Erstwhile RP & Chairman of Monitoring Committee of GB Global Ltd. & Anr. – NCLAT New Delhi Read Post »

Interpretation of Section 29A(h) of IBC – Bank of Baroda & Anr. Vs. MBL Infrastructures Ltd. & Ors. – Supreme Court

Hon’ble Supreme Court holds that once an application for insolvency resolution is admitted on behalf of ‘a creditor’ then the process would be one of rem, and therefore, all creditors of the same class would have their respective rights at par with each other. The word “such creditor” in Section 29A(h) has to be interpreted to mean similarly placed creditors after the application for insolvency application is admitted by the adjudicating authority. As a result, what is required to earn a disqualification under the said provision is a mere existence of a personal guarantee that stands invoked by a single creditor, notwithstanding the application being filed by any other creditor seeking initiation of insolvency resolution process. This is subject to further compliance of invocation of the said personal guarantee by any other creditor. We have already said that the concern of the Court is only from the point of view of two entities viz., corporate creditors and the corporate debtors. Any other interpretation would lead to an absurdity striking at the very objective of Section 29A, and hence, the Code. Ineligibility has to be seen from the point of view of the resolution process. It can never be said that there can be ineligibility qua one creditor as against others. Rather, the ineligibility is to the participation in the resolution process of the corporate debtor. Exclusion is meant to facilitate a fair and transparent process.

Interpretation of Section 29A(h) of IBC – Bank of Baroda & Anr. Vs. MBL Infrastructures Ltd. & Ors. – Supreme Court Read Post »

NCLAT set aside Resolution Plan approval order of NCLT for Videocon Industries Group – Bank of Maharashtra Vs. Videocon Industries Ltd. – NCLAT New Delhi

NCLAT set aside the order of Adjudicating Authority on various grounds as Trademark Issue, Payment to the Dissenting Financial Creditors and Approval of the Competition Commission of India.

NCLAT set aside Resolution Plan approval order of NCLT for Videocon Industries Group – Bank of Maharashtra Vs. Videocon Industries Ltd. – NCLAT New Delhi Read Post »

Any increase in the claim amount of the Assenting Financial Creditors due to the invocation of a Bank Guarantee cannot be a ground for challenge by the Dissenting Financial Creditors on discrimination basis – Union Bank of India Vs. Ms. Vandana Garg (Erstwhile RP/Monitoring Committee Chairperson of Jyoti Structures Ltd.) – NCLT Mumbai Bench

The Adjudicating Authority observed that Section 30(2)(b) of the Code provides for the payment of debts of the Dissenting FCs in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with Section 53(1) of the Code in the event of liquidation. Any increase in the claim amount of the Assenting FCs due to the invocation of such BG cannot be a ground for challenge by the Dissenting FCs on grounds of discrimination. Further, the decision to include the invoked amount of the BG to the fund-based debts is a commercial decision of the CoC. Further, Resolution Plan once approved by the AA shall stand frozen and binding on all stakeholders including FCs

Any increase in the claim amount of the Assenting Financial Creditors due to the invocation of a Bank Guarantee cannot be a ground for challenge by the Dissenting Financial Creditors on discrimination basis – Union Bank of India Vs. Ms. Vandana Garg (Erstwhile RP/Monitoring Committee Chairperson of Jyoti Structures Ltd.) – NCLT Mumbai Bench Read Post »

The considerations including priority in scheme of distribution and the value of security are matters falling within the realm of Committee of Creditors – India Resurgence ARC Private Limited Vs. M/s. Amit Metaliks Limited – NCLAT New Delhi

NCLAT holds that the considerations including priority in scheme of distribution and the value of security are matters falling within the realm of Committee of Creditors. Such considerations, being relevant only for purposes for arriving at a business decision in exercise of commercial wisdom of the Committee of Creditors, cannot be the subject of judicial review in appeal within the parameters of Section 61(3) of I&B Code. While it is true that prior to amendment of Section 30(4) the Committee of Creditors was not required to consider the value of security interest obtaining in favour of a Secured Creditor while arriving at a decision in regard to feasibility and viability of a Resolution Plan, legislature brought in the amendment to amplify the scope of considerations which may be taken into consideration by the Committee of Creditors while exercising their commercial wisdom in taking the business decision to approve or reject the Resolution Plan. Such consideration is only aimed at arming the Committee of Creditors with more teeth so as to take an informed decision in regard to viability and feasibility of a Resolution Plan, fairness of distribution amongst similarly situated creditors being the bottom line. However, such business decision taken in exercise of commercial wisdom of Committee of creditors would not warrant judicial intervention unless creditors belonging to a class being similarly situated are not given a fair and equitable treatment. The appeal is dismissed. (p7-8)

The considerations including priority in scheme of distribution and the value of security are matters falling within the realm of Committee of Creditors – India Resurgence ARC Private Limited Vs. M/s. Amit Metaliks Limited – NCLAT New Delhi Read Post »

Whether the adjudicating authority has the jurisdiction of judicial review and appoint an independent valuer to conduct fresh valuation of Intangible assets of CD? – Corporation Bank Vs. Unimark Remedies Limited – NCLT Mumbai

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Whether the adjudicating authority has the jurisdiction of judicial review and appoint an independent valuer to conduct fresh valuation of Intangible assets of CD? – Corporation Bank Vs. Unimark Remedies Limited – NCLT Mumbai Read Post »

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