05 (24) (l)

Is Resolution Professional empowered to decide about the status of a creditor as related party? | If a Corporate Debtor is controlled by a Trust, the said trust would fall under the category of related party? – Hari Vitthal Mission Vs. Ravi Sethia RP of Suasth Healthcare Foundation – NCLAT New Delhi

Hon’ble NCLAT held that IRP/RP has to decide about related party status of creditors of the CD for constituting the CoC as related parties cannot form part of CoC. After confirmation as RP appointment of IRP as RP the matters relating to CoC continue to be handled by RP as he chairs the CoC meetings. If the CD is controlled by a trust in the manner prescribed by aforesaid Sections of the Code, then the said trust would fall under the category of related party.

Is Resolution Professional empowered to decide about the status of a creditor as related party? | If a Corporate Debtor is controlled by a Trust, the said trust would fall under the category of related party? – Hari Vitthal Mission Vs. Ravi Sethia RP of Suasth Healthcare Foundation – NCLAT New Delhi Read Post »

A Resolution Plan passed by a CoC, which is comprised of related parties of the Corporate Debtor, is void ab initio as it violates Section 21(2) read with Section 30(2)(e) of IBC, 2016 – M/s. Punjabi Accessoriezz Pvt. Ltd. Vs. M/s. Kredo Beauty Pvt. Ltd. – NCLT New Delhi Bench Court-II

The present IA has been filed by the Resolution Professional for approval of the Resolution plan. The entire Committee of Creditors (CoC) of the Corporate Debtor consists of its Shareholders only. There are only 04 shareholders in the present Corporate Debtor, and both the Members of the CoC are from amongst them. To appoint or remove a Director, an Ordinary Resolution is required to be passed. Voting by Show of Hands, is not excluded as a mode of voting for an Ordinary Resolution for either appointing or removing a Director of the Board. To pass an Ordinary Resolution by a show of hands, approval of more than 50% of the “shareholders in number” is required, which in the present case comes to 3.
The Adjudicating Authority referring various provision of the Companies Act, 2013 with section 5(24(l) of IBC held that if voting by show of hands would have taken place for passing an Ordinary Resolution for the appointment or removal of a Director in the Corporate Debtor i.e., Kredo Beauty Pvt. Ltd., then the same could not have been possible without the participation of any of the CoC members. Therefore, we are of the firm view that the said two shareholders, who are also the members of the CoC of the Corporate Debtor, were capable of controlling the composition of the Board of Directors of the said Corporate Debtor. Hence, by virtue of their capability of controlling the composition of the Board of Directors of the Corporate Debtor, we conclude that both the CoC members/CoC as a whole comprised of “related parties” to the Corporate Debtor in terms of Section 5(24)(l) of IBC, 2016 and therefore, the entire constitution of CoC is erroneous in the eyes of law.

A Resolution Plan passed by a CoC, which is comprised of related parties of the Corporate Debtor, is void ab initio as it violates Section 21(2) read with Section 30(2)(e) of IBC, 2016 – M/s. Punjabi Accessoriezz Pvt. Ltd. Vs. M/s. Kredo Beauty Pvt. Ltd. – NCLT New Delhi Bench Court-II Read Post »

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