Edelweiss Asset Reconstruction Company Limited Vs. Synergy Dooray Automotive Limited and Ors -NCLT Hyderabad Bench

I. Case Reference Case Citation : (2017) ibclaw.in 54 NCLT Case Name : Edelweiss Asset Reconstruction Company Limited Vs. Synergies […]

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I. Case Reference

Case Citation : (2017) ibclaw.in 54 NCLT
Case Name : Edelweiss Asset Reconstruction Company Limited Vs. Synergies Dooray Automotive Limited and Ors
Financial Creditor : Edelweiss Asset Reconstruction Company Limited
Corporate Debtor : Synergies Dooray Automotive Limited
Appeal No. : CA No. 43 and 57 of 2017 in CP No. 01/IBC/HDB/2017
Judgment Date : 02-Aug-17
Court/Bench : NCLT Hyderabad Bench
Act : Insolvency & Bankruptcy Code 2016
Member (Judicial) : Sh. Rajeswara Rao Vittanala
Member (Technical) : Shri Ravikumar Duraisamy
Case Status : [2018] ibclaw.in 102 NCLAT

II. Brief about the decision

It was contended by the applicant that SCL, a related party of the corporate debtor assigned a substantial chunk of total debt of the corporate debtor to MFL, a financial creditor on 24th November, 2016, immediately prior to the reference of the corporate debtor before BIFR abated pursuant to coming into effect of the Sick Industrial Companies (Repeal) Act on December 1st, 2016 is questionable and suspicious. While the related party could not have become a member of the CoC, the assignee financial creditor could. After perusing various records, the NCLT held the opinion that there is no relationship between SCL and MFL. Accordingly, MFL is not a related party and is fully competent to participate in COC. At most it can be said to be similar to ‘tax planning’ rather than tax avoidance.

III. Full text of the judgement

https://ibclaw.in/wp-content/uploads/2021/02/Edelweiss-Asset-Reconstruction-Company-Limited.pdf

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