02/03/2021

Salary for the period prior to the commencement of CIRP, in case any Resolution Plan is approved, the Resolution Applicant shall bear the expenses – Committee of Creditors of EMCO Limited Vs. Mrs. Mary Mody – NCLAT New Delhi

Section 25(2)(c) deals with ‘Duties of Resolution Professional’ with respect to raising Interim Finance subject to the approval of Committee of Creditors under Section 28. Section 28 refers to whether the approval of Committee of Creditors is required for raising ‘Interim Finance’. It is reiterated by the Resolution Professional that the Corporate Debtor is not a going concern. The Application MA 4002/2019 in CP (IB) No. 2849/MB/2018 was preferred by the employees seeking direction to also pay the salaries for the period prior to the commencement of CIRP cost. It is a well settled proposition of law that for the cost incurred prior to the CIRP process, in case any Resolution Plan is approved, the ‘Resolution Applicant’ shall bear the expenses. In the instant case, it is not in dispute that the Resolution Plan has not been approved and the CoC has recommended for liquidation.

Salary for the period prior to the commencement of CIRP, in case any Resolution Plan is approved, the Resolution Applicant shall bear the expenses – Committee of Creditors of EMCO Limited Vs. Mrs. Mary Mody – NCLAT New Delhi Read Post »

COC is empowered to take a decision in regard to liquidation of the Corporate Debtor even after an application has been filed by the Resolution Professional placing the Resolution Plan approved by the COC before the Adjudicating Authority for approval – Mr. Gulabchand Jain Vs. Mr. Ramchandra D. Choudhary, Resolution Professional of Vijay Timber Industries Pvt. Ltd. – NCLAT New Delhi

NCLAT holds that under Section 33(2) of the IBC read together with explanation inserted by Act 26 of 2019 enforced w.e.f. 16th August, 2019, the COC is empowered to take a decision in regard to liquidation of the Corporate Debtor even after an application has been filed by the Resolution Professional placing the Resolution Plan approved by the COC before the Adjudicating Authority for approval. Of course, the withdrawal of the Resolution Plan can be done before its approval by the Adjudicating Authority. This implies that even after approval of the Resolution Plan by the COC and laying it before the Adjudicating Authority, the COC can change its mind and pass a Resolution liquidating the Corporate Debtor subject to only exception that such course cannot be adopted after its confirmation i.e. after approval of the Resolution Plan by the Adjudicating Authority.

COC is empowered to take a decision in regard to liquidation of the Corporate Debtor even after an application has been filed by the Resolution Professional placing the Resolution Plan approved by the COC before the Adjudicating Authority for approval – Mr. Gulabchand Jain Vs. Mr. Ramchandra D. Choudhary, Resolution Professional of Vijay Timber Industries Pvt. Ltd. – NCLAT New Delhi 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 »

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