CIRP-IV Rplan-Invitation/Submission/Modification/Withdrawal [ISMW]

Any direction to consider the EoI received after the specified time would run counter to the very objective of resolving the insolvency of the Corporate Debtor in a time-bound manner – Mr Vikram Venkatrao Gaikwad Vs. Mr. Jitendra Palande RP of Jogeshwari Breweries Pvt. Ltd. and Anr. – NCLT Mumbai Bench

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Any direction to consider the EoI received after the specified time would run counter to the very objective of resolving the insolvency of the Corporate Debtor in a time-bound manner – Mr Vikram Venkatrao Gaikwad Vs. Mr. Jitendra Palande RP of Jogeshwari Breweries Pvt. Ltd. and Anr. – NCLT Mumbai Bench Read Post »

Adjudicating Authority is forum alone which shall finally decide whether the CoC has performed its fiduciary duty as per the legislative mandate of the IBC – Gateway Investment Management Services Ltd. Vs. Reserve Bank of India and Ors. – Delhi High Court

Hon’ble Delhi High Court referring Guidelines for Committee of Creditors (CoC) issued by IBBI on 06.08.2024 held that Court is not enjoined upon to exercise its power of judicial review and thereby usurp upon the powers of the NCLT to inquire into the commercial wisdom of the CoC whereby the Resolution Plan of the petitioner was rejected. The decision of the CoC shall definitely be considered by the NCLT in a just and expedient manner, and if it deems fit it, may even allow “Open Court Bidding” in accordance with law.

Adjudicating Authority is forum alone which shall finally decide whether the CoC has performed its fiduciary duty as per the legislative mandate of the IBC – Gateway Investment Management Services Ltd. Vs. Reserve Bank of India and Ors. – Delhi High Court 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 »

Whether Prospective Resolution Applicant is an Aggrieved Party to file appeal under Section 61 of IBC to challenge an order of NCLT allowing Erstwhile Promoter/ Director of the Corporate Debtor to submit Resolution Plan in CIRP – Meir Commodities India Pvt. Ltd. Prospective Resolution Applicant of NCS Sugars Ltd. Vs. Mr. Narayanam Nageswara Rao and Ors. – NCLAT Chennai

Hon’ble NCLAT observes that there is no material right which is prejudiced by passing of the Impugned Order by the Adjudicating Authority, which could give him a cause to challenge the same by invoking Section 61 of the I & B Code, 2016, and that too, in the status of being a Prospective Resolution Applicant, where he has only expressed his interest to submit the Resolution Proposal and has not even reached the stage of submitting Resolution Proposal. The Appellant does not have any cause of action, as such, as against the Impugned Order, in the status of his being a Prospective Resolution Applicant.

Whether Prospective Resolution Applicant is an Aggrieved Party to file appeal under Section 61 of IBC to challenge an order of NCLT allowing Erstwhile Promoter/ Director of the Corporate Debtor to submit Resolution Plan in CIRP – Meir Commodities India Pvt. Ltd. Prospective Resolution Applicant of NCS Sugars Ltd. Vs. Mr. Narayanam Nageswara Rao and Ors. – NCLAT Chennai Read Post »

Resolution Professional cannot exclude existing homebuyers/ past developers \ related/connected persons in EOI from submission of Rplan | RP/CoC can lay down additional criterion in Form G only having regard to the complexity and scale of operations of the business of the Corporate Debtor, as per Section 25(2)(h) of IBC – Mr. Dinesh Chaplot and Anr. Vs. Mr. Dinesh Kumar Deora, RP of Snehanjali and S.B. Developers Pvt. Ltd. – NCLT Mumbai Bench

Hon’ble NCLT Mumbai Bench held that:

(i) As per Section 25(2)(h) of the IBC, the duty of the RP to lay down the criteria for inviting prospective resolution applicants (PRAs) must be with the approval of the CoC and is not independent.
(ii) The duty of both RP and CoC is to lay down such criterion as is formulated only having regard to the complexity and scale of operations of the business of the CD and other conditions specified by the IBBI.
(iii) From a conjoint reading of Section 25(2)(h) and Regulation 36A (1), it can be presumed that the RP is not authorised to adjudicate as to the qualification or disqualification of PRAs.
(iv) An insolvency professional is duty bound to abide by all the laws at all times during the resolution process. An RP is the only person who would ensure compliance of all the laws in the processes under the IBC.
(v) Neither the CoC nor the RP has any inherent right to negate a statutory provision available to a person to submit EOI, if such a person is otherwise not ineligible within the meaning of Section 29A of the IBC.

Resolution Professional cannot exclude existing homebuyers/ past developers \ related/connected persons in EOI from submission of Rplan | RP/CoC can lay down additional criterion in Form G only having regard to the complexity and scale of operations of the business of the Corporate Debtor, as per Section 25(2)(h) of IBC – Mr. Dinesh Chaplot and Anr. Vs. Mr. Dinesh Kumar Deora, RP of Snehanjali and S.B. Developers Pvt. Ltd. – NCLT Mumbai Bench Read Post »

Under no circumstances Resolution Professional can short circuit the procedure and seek approval of a Resolution Plan that leads to cancellation of an existing lease, on the ground that it has been approved by the CoC – H. R. Brothers Ltd. Vs. Ramachandra Dallaram Choudhary, RP and Ors. – NCLT Kolkata Bench

In this case, a Clause 4.9.3 is included in the Resolution Plan which states that all litigation with respect to the title of the land shall stand extinguished upon approval of the resolution plan and all leasehold rights shall stand cancelled and revenue authority shall remove the name of third party from the revenue records upon the approval of the resolution plan etc.

Hon’ble NCLT Kolkata Bench held that it is a trite, axiomatic and settled law that the Adjudicating Authority is not a civil court to resolve a civil dispute, thus, cancellation or extinguishment of the leasehold right in question cannot be sought for at this forum. The lease, even if contrary to law, can only be determined by an appropriate forum of civil jurisdiction.

The Hon’ble Bench directed the RP to delete the clause 4.9.3 in the plan and/or refrain from inclusion of any clause in the resolution plan which contemplates cancellation and/or termination of the existing registered lease in favour of the Applicant, herein. Since the rights of the Corporate Debtor as a “lessor” passes on to the SRA as it steps into the shoes of the Corporate Debtor, an appropriate action may be taken including an action before a competent Court of law concerning the disputed lease mentioned at Clause 4.9.3 of the Resolution Plan.

Under no circumstances Resolution Professional can short circuit the procedure and seek approval of a Resolution Plan that leads to cancellation of an existing lease, on the ground that it has been approved by the CoC – H. R. Brothers Ltd. Vs. Ramachandra Dallaram Choudhary, RP and Ors. – NCLT Kolkata Bench Read Post »

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