Other-Fair Value

Valuation based on relevant material requires no interference | Dues not included in Resolution Plan are extinguished post approval | IBC provisions override SEZ Act and Rules – Noida Special Economic Zone Authority Vs. Manish Agarwal and Ors. – Supreme Court

In this judgment, the Hon’ble Supreme Court clarifies following issues:

A. Valuation does not call for any interference if it is based on relevant material on record.
B. All the dues is not the part of the Resolution Plan shall stand extinguished and no proceedings could be pressed into service or continues.
C. Claims pertaining to the transfer fees, etc. were not to be interfered with by courts or tribunals as the same stood related to the commercial wisdom of the CoC.
D. Does provision of IBC override Special Economic Zone Act and Rules?

Valuation based on relevant material requires no interference | Dues not included in Resolution Plan are extinguished post approval | IBC provisions override SEZ Act and Rules – Noida Special Economic Zone Authority Vs. Manish Agarwal and Ors. – Supreme Court Read Post »

CoC under commercial wisdom can decide not to conduct third valuation even in case of significantly different between two estimates | There is no specific bar under IBC that a Creditor cannot claim its remaining debt from Guarantor which has not been recovered from Corporate Debtor – Hemant Shantilal Shah Vs. Care Office Equipment Ltd. and Ors. – NCLAT New Delhi

In the present facts of the case, the CoC after deliberations decided in the 6th CoC meeting that a third valuer would require to be appointed only if there was gulf of a difference in the stock valuation figures estimated by the two appointed valuers, while the 7th CoC meeting after noticing the valuation reports of the two valuers decided against the appointment of the third valuer. This position was later confirmed by the CoC.

Hon’ble NCLAT held that that being the considered business decision of the CoC, the supremacy of the commercial wisdom cannot be questioned by the Appellants. In fine, we do not find any infirmity in the conduct of the valuation exercise.

Further, held that when the CoC in its wisdom has approved the resolution plan which provided for the continued rights of the Financial Creditor against the personal guarantor and did away with the subrogation rights of the personal guarantors, the contention of the Appellant that the liability of the personal guarantors should stand extinguished, not being in sync with the commercial wisdom of the CoC, is clearly devoid of merit.

CoC under commercial wisdom can decide not to conduct third valuation even in case of significantly different between two estimates | There is no specific bar under IBC that a Creditor cannot claim its remaining debt from Guarantor which has not been recovered from Corporate Debtor – Hemant Shantilal Shah Vs. Care Office Equipment Ltd. and Ors. – NCLAT New Delhi Read Post »

IBC does not expressly bar that Resolution Plan value should be over and above Liquidation value | The approval of Resolution Plan below Liquidation value is within the commercial wisdom of CoC – Mr. Ramesh Kesavan Vs. CA Jasin Jose, RP SD Pharmacy Pvt. Ltd. – NCLAT Chennai

Hon’ble NCLAT holds that:
(i) In the instant case, the approval of the Resolution Plan below the Liquidation value is within the commercial wisdom of the CoC as the Code does not expressly bar that the Resolution Plan value should be over and above the Liquidation value. Hence, there is no material irregularity.
(ii) The Resolution Plan is approved by a 100 % voting share of the CoC and there is no material irregularity on the face of record and we are satisfied that the Resolution Plan conforms to the requirement set out in Section 30(2) of the Code.
(iii) The Hon’ble Delhi High Court in TATA Steel BSL v. Venus Recruiters Pvt. Ltd. (2023) ibclaw.in 09 HC has held that there is no bar to proceed against the concerned Resolution Applicants before other Fora/Courts in cases of avoidance transactions.
(iv) It has been held in Ravi Shankar Vedam vs. Tiffins Barytes Asbestos and Paints Ltd. and Ors. (2023) ibclaw.in 394 NCLAT that the Promoter /Shareholder of the Corporate Debtor Company has no locus to challenge the Plan, after its approval. The ratio of the Judgement in the matter of M.K. Rajagopalan v. Dr. Periasamy Palani Gounder & Anr. (2023) ibclaw.in 60 SC, is not applicable to the facts of the attendant case on hand as the subject matter of that case is that there was an established material irregularity in the approval of the Plan and the issue of the ‘locus’ has not been specifically been addressed to. More ever, the Judgement of the Hon’ble Apex Court in the matter of Ravi Shakar Vedam (Supra) is dated 06.11.2023 and is later than M.K. Rajagopalan (Supra) which is dated 03.05.2022.

IBC does not expressly bar that Resolution Plan value should be over and above Liquidation value | The approval of Resolution Plan below Liquidation value is within the commercial wisdom of CoC – Mr. Ramesh Kesavan Vs. CA Jasin Jose, RP SD Pharmacy Pvt. Ltd. – NCLAT Chennai Read Post »

There is no provision in IBC for revaluation, much less if a plan has already been received and its value is known to the CoC, as the CoC has to take a commercial call on the matter considering various Pros and Cons in terms of the recovery of their claims in an absolute sense and not on relative term – Kannan Tiruvengadam RP for EMC Ltd. – NCLT Kolkata Bench

The corporate debtor, EMC Limited was admitted to CIRP on 12.112018 subsequent to which the resolution process was initiated and a resolution plan was approved by this Adjudicating authority. However, as the successful resolution applicant failed to implement the Resolution Plan, this Adjudicating Authority vide Order dated 20.04.2018, directed a limited reboot of the CIRP from the stage of Form G publication. The Present application filed by the RP appointed in the matter seeking reliefs that pass an order to conduct fresh valuation of the Corporate Debtor to determine the Fair Value of the Corporate Debtor as on 20.04.2022.

There is no provision in IBC for revaluation, much less if a plan has already been received and its value is known to the CoC, as the CoC has to take a commercial call on the matter considering various Pros and Cons in terms of the recovery of their claims in an absolute sense and not on relative term – Kannan Tiruvengadam RP for EMC Ltd. – NCLT Kolkata Bench Read Post »

No legal impediment for a Trust to be a Resolution Applicant in submitting a Resolution Plan – M/s. Aswathi Agencies Vs. Bijoy Prabhakaran Pulipra, RP PVS Memorial Hospital Pvt. Ltd. – NCLAT Chennai

NCLAT held that to put it precisely, the word `Person’, is defined as per Section 3(23)(d) of the Code, which includes a Trust, therefore, there is no fetter/embargo or a legal impediment, for a Trust, to be a Resolution Applicant, in submitting a Resolution Plan (in the present case), the candid fact, is that the Successful Resolution Applicant being a Registered Charitable Trust, under the Indian Trust Act, 1882, in CIRP, in the cocksure earnest opinion. Looking at from that perspective, the contra plea taken on behalf of the Appellant is not acceded to by this Tribunal.

No legal impediment for a Trust to be a Resolution Applicant in submitting a Resolution Plan – M/s. Aswathi Agencies Vs. Bijoy Prabhakaran Pulipra, RP PVS Memorial Hospital Pvt. Ltd. – NCLAT Chennai Read Post »

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