CIRP-27

CoC under commercial wisdom can decide not to conduct third valuation even in case of significantly different between two estimates | There is no specific bar under IBC that a Creditor cannot claim its remaining debt from Guarantor which has not been recovered from Corporate Debtor – Hemant Shantilal Shah Vs. Care Office Equipment Ltd. and Ors. – NCLAT New Delhi

In the present facts of the case, the CoC after deliberations decided in the 6th CoC meeting that a third valuer would require to be appointed only if there was gulf of a difference in the stock valuation figures estimated by the two appointed valuers, while the 7th CoC meeting after noticing the valuation reports of the two valuers decided against the appointment of the third valuer. This position was later confirmed by the CoC.

Hon’ble NCLAT held that that being the considered business decision of the CoC, the supremacy of the commercial wisdom cannot be questioned by the Appellants. In fine, we do not find any infirmity in the conduct of the valuation exercise.

Further, held that when the CoC in its wisdom has approved the resolution plan which provided for the continued rights of the Financial Creditor against the personal guarantor and did away with the subrogation rights of the personal guarantors, the contention of the Appellant that the liability of the personal guarantors should stand extinguished, not being in sync with the commercial wisdom of the CoC, is clearly devoid of merit.

CoC under commercial wisdom can decide not to conduct third valuation even in case of significantly different between two estimates | There is no specific bar under IBC that a Creditor cannot claim its remaining debt from Guarantor which has not been recovered from Corporate Debtor – Hemant Shantilal Shah Vs. Care Office Equipment Ltd. and Ors. – NCLAT New Delhi Read Post »

Whether Resolution Professional is under legal obligation to inform the fair, liquidation value of the Corporate Debtor to the Appellant/Operational Creditor, who is not a member of CoC? – Chhattisgarh State Power Distribution Company Ltd. (CSPDCL) Vs. Salasar Steel and Power Ltd. – NCLAT New Delhi

The points need to be answered in this appeal are as follows:

(i) Whether the CoC and Adjudicating Authority discriminated the Operational Creditors from Financial Creditor while approving the Resolution plan making the Appellant to loss 100% of its claim, if so, the order is liable to be set aside.

(ii) Whether the Resolution Professional is under legal obligation to inform the fair, liquidation value of the Corporate Debtor to the Appellant, who is not a member of CoC?

(iii) Whether the alleged failure to appoint a registered valuer for valuing the Corporate Debtor to fix, fair and liquidation value is an legality in the order passed by the Adjudicating Authority.

Whether Resolution Professional is under legal obligation to inform the fair, liquidation value of the Corporate Debtor to the Appellant/Operational Creditor, who is not a member of CoC? – Chhattisgarh State Power Distribution Company Ltd. (CSPDCL) Vs. Salasar Steel and Power Ltd. – NCLAT New Delhi Read Post »

Procedure & power to call third valuation on fair and liquidation value and acceptance of the third valuation report – M/s. Rana Saria Poly Pack Pvt. Ltd. Vs. Uniworld Sugars Pvt. Ltd. – NCLAT New Delhi

Important judgment-NCLAT formulates a guideline on requirement of third valuation for fair and liquidation value, procedure of obtaining a third valuation, who have power to call third valuation, Valuation is basis for payments to creditors and relevancy of liquidation value, Commercial Wisdom of CoC on valuation, Forensic audit-placing the forensic audit report for the consideration of the Adjudicating Authority, quantum of liquidation value is relevant & material in allocating payments creditors etc.

Procedure & power to call third valuation on fair and liquidation value and acceptance of the third valuation report – M/s. Rana Saria Poly Pack Pvt. Ltd. Vs. Uniworld Sugars Pvt. Ltd. – NCLAT New Delhi Read Post »

Directorate of Commercial Taxes Vs. Kharkia Steels Pvt. Ltd. – NCLAT New Delhi

NCLAT held that in accordance with section 238, when the resolution plan is proposed under the provisions of IBC during the currency of CIRP and considered by the CoC and subsequently approved by the Adjudicating Authority, all these actions taking place during the currency of CIRP, section 238 provides full protection to the actions taken under IBC against any other law or instrument, which may be inconsistent with the provisions of IBC. Therefore, the payments of operational debt as proposed in the successful resolution plan is completely legitimate and having the force of law.

Directorate of Commercial Taxes Vs. Kharkia Steels Pvt. Ltd. – NCLAT New Delhi Read Post »

Suspended Board of Directors under the Code, 2016 do not have power to replace a Resolution Professional – Anil Kumar Ojha Vs. Chandramouli Ramasubramaniam RP of SLO Industrial Ltd. & Anr. – NCLAT Chennai

NCLAT holds that the Adjudicating Authority is of the considered opinion that the Committee of Creditors is entitled and also empowered to change the Resolution Professional in CIRP and that too, with a Majority of 66 % votes. In reality, the Suspended Board of Director under the Code, 2016 is not enjoined with the power to displace the existing Resolution Professional and to seek for a replacement of another Resolution Professional, being appointed in his place. Added further, an Adjudicating Authority is to adhere to the procedural formalities which are mentioned in the relevant Sections of the Code, depending on the controversies involved, in the subject matter.

Suspended Board of Directors under the Code, 2016 do not have power to replace a Resolution Professional – Anil Kumar Ojha Vs. Chandramouli Ramasubramaniam RP of SLO Industrial Ltd. & Anr. – NCLAT Chennai Read Post »

Adjudicating Authority is not competent to recall the order of initiation of CIRP – Mr. Vineet Khosla Shareholder and (ex) Director Margra Industries Ltd. Vs. M/S Edelweiss Asset Reconstruction Company Ltd. – NCLAT New Delhi

In this case, with the direction of CoC, the RP has filed an Application under Section 33(1) for liquidation of the Corporate Debtor and the AA allowed the same. Meanwhile, the Suspended director filed an Application seeking recall of the order of initiation of CIRP on some grounds. Ld. Adjudicating Authority held that limitation issue is a question of fact and law. This issue should have been raised at the time of admission or at least in the Appeal before the Appellate Tribunal. NCLAT holds that the Adjudicating Authority is not competent to recall the order of initiation of CIRP.

Adjudicating Authority is not competent to recall the order of initiation of CIRP – Mr. Vineet Khosla Shareholder and (ex) Director Margra Industries Ltd. Vs. M/S Edelweiss Asset Reconstruction Company Ltd. – NCLAT New Delhi Read Post »

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