21 (2)

Simply because a Director/key managerial person of the Corporate Debtor is also Director of another Company, it cannot be termed to be a case of Section 21 of IBC, when such Company is not at all a party of CoC – Mr. Vipin Kumar Sharma Vs. Mr. Sunit Suri and Ors. – NCLT Bengaluru Bench

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Simply because a Director/key managerial person of the Corporate Debtor is also Director of another Company, it cannot be termed to be a case of Section 21 of IBC, when such Company is not at all a party of CoC – Mr. Vipin Kumar Sharma Vs. Mr. Sunit Suri and Ors. – NCLT Bengaluru Bench Read Post »

The debt shall become due only when there is liability or obligation in respect of a claim, which is due from any person – Saratvam Creators Vs. Sudhir Construction Infrapase Pvt. Ltd. and Ors. – NCLAT New Delhi

The Appellate Tribunal, thus, is not persuaded to accept the submission of the Appellant that disbursement of the whole loan money is not a sine qua non to qualify as a Financial Creditor. The liability of the guarantor has to be the same as of the principal borrower. When Financial Creditor has not disbursed the amount of Rs.195 crores to the principal borrower, The Appellate Tribunal fails to see that how against the guarantor, the claim of Rs.195 crores can be admitted.

The debt shall become due only when there is liability or obligation in respect of a claim, which is due from any person – Saratvam Creators Vs. Sudhir Construction Infrapase Pvt. Ltd. and Ors. – NCLAT New Delhi Read Post »

Whether Operational Creditor has priority in payment in distribution under Section 53 of IBC over Unsecured Financial Creditor who is a related party of the Corporate Debtor? – Times Innovative Media Ltd. Vs. Pawan Kumar Aggarwal (Liquidator) and Anr. – NCLAT New Delhi

Hon’ble NCLAT held that:

(i) On plain reading of Section 53(1), it is clear that financial debts owed to unsecured creditors ranked higher than debt of operational creditor.
(ii) Scheme of Regulations 2016 does not indicate that related party is excluded from filing a claim.
(iii) Appellant cannot claim any priority in distribution of assets of the corporate debtor as compared to unsecured financial creditor.

Whether Operational Creditor has priority in payment in distribution under Section 53 of IBC over Unsecured Financial Creditor who is a related party of the Corporate Debtor? – Times Innovative Media Ltd. Vs. Pawan Kumar Aggarwal (Liquidator) and Anr. – NCLAT New Delhi Read Post »

A related party having a bar of not being allowed to be a member of CoC cannot get over the said bar merely by assignment of the Debt – Greenshift Initiatives Pvt. Ltd. Vs. Sonu Gupta, RP of Rolta Bi & Big Data Analytics Pvt. Ltd. – NCLT Mumbai Bench

Hon’ble NCLT Mumbai Bench held that a related party having a bar of not being allowed to be part of CoC cannot get over the said bar merely by assignment. The assignment of debt will carry the prohibition or bar which were there in the hands of related party. Assignment is transfer of one’s rights to recover debt to another person and that the rights of the Assignee are no better than that of an Assignor. Thus, the Assignee does not get the right to change its status from a related to an unrelated party merely by the assignment of the debt.

A related party having a bar of not being allowed to be a member of CoC cannot get over the said bar merely by assignment of the Debt – Greenshift Initiatives Pvt. Ltd. Vs. Sonu Gupta, RP of Rolta Bi & Big Data Analytics Pvt. Ltd. – NCLT Mumbai Bench Read Post »

Can Assignee be treated as non-related party and voted in CoC meetings when Financial Debt transferred by related party Financial Creditor on an arm-length transaction during ongoing CIRP – Peanence Commercial Pvt. Ltd. and Anr. Vs. Mamta Binani, RP for Rolta India Ltd. – NCLAT New Delhi

In this case, Rolta Pvt. Ltd. entered into MoU with Peanence Commercial Pvt. Ltd. for assignment of debt for a one-time consideration. It was argued that the Assignment for consideration of Rs.50 Crore is an arm-length transaction and Peanence Commercial Pvt. Ltd. is not a related party to the Corporate Debtor nor there is any disqualification attached to the Assignee to be part of the Committee of Creditors.
Hon’ble NCLAT held that:

(i) Present is a case where in fact no assignment has taken place. What is entered between the parties is agreement for assignment that is contingent on approval by the Resolution Professional that Assignee will be given a seat in the CoC.
(ii) The Adjudicating Authority has rightly noticed the judgment of the Hon’ble Supreme Court in Phoenix ARC Pvt. Ltd. vs. Spade Financial Services Ltd. & Ors. (2021) ibclaw.in 03 SC.
(iii) At this stage, the Assignment Agreement which has been entered by the parties and has been communicated to the Resolution Professional, clearly indicates that Rolta Pvt. Ltd. is trying to bring its Assignee to create hurdles and delay in the CIRP of the Corporate Debtor.

Can Assignee be treated as non-related party and voted in CoC meetings when Financial Debt transferred by related party Financial Creditor on an arm-length transaction during ongoing CIRP – Peanence Commercial Pvt. Ltd. and Anr. Vs. Mamta Binani, RP for Rolta India Ltd. – NCLAT New Delhi Read Post »

Operational Creditor being a participant in the meeting of the committee of creditors (CoC) has no right to seek a copy of the Information Memorandum(IM) – Vinay Kumar Singhal RP for PG Advertising Pvt. Ltd. Vs. Mahesh Bajaj – NCLAT New Delhi

The issue involved in this case is as to whether copy of information memorandum can be ordered to be given to the Respondent (Operational Creditor) who is merely a participant in the CoC and not a member?

Hon’ble NCLAT held that:
(i) There is no definition of member provided in the Code or the Regulations which has been repeatedly used in the Code as well as Regulations.
(ii) The Code and Regulations are totally silent about the supply of the information memorandum to the participant, it has to be inferred that the legislature has made a provision for providing a copy of the information memorandum to the member of the CoC and the Resolution Applicant but not to the participant of the meeting of the CoC
(iii) The Operational Creditor being a participant in the meeting of the CoC has no right to seek a copy of the information memorandum.

Operational Creditor being a participant in the meeting of the committee of creditors (CoC) has no right to seek a copy of the Information Memorandum(IM) – Vinay Kumar Singhal RP for PG Advertising Pvt. Ltd. Vs. Mahesh Bajaj – NCLAT New Delhi Read Post »

Can a single person CoC approve Resolution Plan? – Jaykay Enterprises Ltd. Vs. National Oil Company Ltd. – NCLT Kolkata Bench

In this important judgment, NCLT Kolkata Bench held that:

(i) The right regarding the land has not been defined, and it is not under our jurisdiction to decide upon the matter.
(ii) The Resolution Professional is in no fault at not providing the information provided in the Information Memorandum to the application as the Applicant is not a member of the Committee of Creditors or a prospective Resolution Applicant, hence it is not entitled to the Information Memorandum.
(iii) The word “Committee” has not been defined in the Part 1 or Part 2 of the Code which deals with Insolvency Resolution and Liquidation for Corporate Persons.
(iv) There can be no meeting when a single person represents CoC (since other persons who attended are only invitees in this case and they don’t form part of CoC) and consequently, “meeting” cannot been held as contemplated under Section 24 of the Code.
(v) There can be no two view that stake holders in a CIRP process is not restricted only to financial and operational creditors.
(vi) A decision to approve the resolution plan by the CoC should be in a validly convened and conducted CoC meeting.
(vii) The resolution plan is sent back to the CoC.
(viii) Once the Resolution Plan is approved by the Adjudicating Authority, then it will no more be a confidential document.
(ix) The Workers’ Union have no locus standi to question the assignment of a debt by Bank.

Can a single person CoC approve Resolution Plan? – Jaykay Enterprises Ltd. Vs. National Oil Company Ltd. – NCLT Kolkata Bench Read Post »

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