PUFE- Proceed of PUFE

Whether CIRP cost determined by Resolution Professional is required any approval of CoC under Sec. 28 of IBC | The determination & payment of CIRP cost is an independent process from any recovery under avoidance applications | After approval of Resolution Plan, Adjudicating Authority is fully empowered to any direction or assign CoC to pursue avoidance applications under Sec. 43, 45, 49 & 66 of the Code – Mehul Parekh and Ors. v. Unimark Remedies and Ors. – NCLAT New Delhi

/ 32 minutes of reading

In this landmark judgment, Hon’ble NCLAT held that:
(i) When the Plan has been approved by the CoC, which included payment of the CIRP cost and it is not shown that CIRP cost determined by the Resolution Professional required any approval under Section 28, we fail to see any reason for redetermination of the CIRP cost by the CoC. The direction to CoC to redetermine the CIRP cost after approval of the Resolution Plan by the CoC is unsustainable.
(ii) The determination of CIRP cost and payment of CIRP cost to those who found entitled to receive the payments is an independent process from any recovery from Promoters/ KMPs, consequent to avoidance application filed by Resolution Professional under the provisions of the Code, including Section 66 of the Code.
(iii) After approval of the Resolution Plan, the Adjudicating Authority is fully empowered to issue any direction, as to how the avoidance applications has to be pursued and direction to pursue the avoidance applications by the CoC as issued therein is fully justifiable.

Whether CIRP cost determined by Resolution Professional is required any approval of CoC under Sec. 28 of IBC | The determination & payment of CIRP cost is an independent process from any recovery under avoidance applications | After approval of Resolution Plan, Adjudicating Authority is fully empowered to any direction or assign CoC to pursue avoidance applications under Sec. 43, 45, 49 & 66 of the Code – Mehul Parekh and Ors. v. Unimark Remedies and Ors. – NCLAT New Delhi Read Post »

Whether Successful Auction Purchaser can prosecute the avoidance application after approval of the acquisition plan – Kunwer Sachdev Vs. Su-Kam Power Systems Ltd. – NCLAT New Delhi

/ 26 minutes of reading

Hon’ble NCLAT held that:
(i) It is the Resolution Professional or Liquidator who are empowered to come to opinion and file an application for avoidance of the transaction.
(ii) Any assets or their value recovered through proceedings for avoidance of transactions shall form the liquidation estate. There can be no dispute to this legal position that proceeds of the avoidance application are part of the liquidation estate.
(iii) The Regulation 44A deals with treatment of transaction avoidance which itself contemplates that there can be a position regarding prosecution of avoidance application even after resolution or closure of liquidation process and the manner in which the proceeds, if any, from such proceedings shall be distributed.
(iv) In the present case it is not a case that avoidance application has been filed by the Successful Auction Purchaser, The Insolvency Law Committee Report does not in any manner help the Appellant.
(v) The issue as to whether the Successful Auction Purchaser can prosecute the avoidance application in place of Resolution Professional by substituting its name was not subject matter of the issue in the aforesaid case of 63 Moons Technologies Ltd. (2022) ibclaw.in 95 NCLAT hence we are of the view that on the ground that civil appeal is pending before the Hon’ble Supreme Court, hearing of the matter need not be deferred.

Whether Successful Auction Purchaser can prosecute the avoidance application after approval of the acquisition plan – Kunwer Sachdev Vs. Su-Kam Power Systems Ltd. – NCLAT New Delhi Read Post »

Interpretation of Preferential & Undervalued Transactions under Section 43 of IBC| Whether the lender of Holding Company could be recognized as Financial Creditors of the Corporate Debtor (Subsidiary Company/Guarantor) on the strength of the mortgage created by the Corporate Debtor, as collateral security of the debt of its Holding Company – Anuj Jain IRP for Jaypee Infratech Ltd. Vs. Axis Bank Ltd. etc. – Supreme Court

/ 257 minutes of reading

This judgment covers:
A.1 PUFE transactions comes into full effect in CIRP too.
A.2 The concept of Preferential Transactions.
A.3 Charging parts of the Section 43 of IBC.
A.4 Section 43 of IBC is deeming provision.
A.5 Look-back period.
A.6 Exclusion Part: Interpretation of Section 43(3) of IBC.
A.6.a. Meaning of “new value” Explanation to Section 43(3).
A.6.b. Transfer made in the ordinary course of the business or financial affairs.
A.6.c. The expression “or”, appearing as disjunctive between the expressions “corporate debtor” and “transferee”, ought to be read as “and”.
A.6.d. The expression ‘ordinary course of business’.
A.7. Net concentrate of Section 43 of IBC.
A.8 Checklist/Test whether a transaction falls squarely within the ambit of Section 43 of the Code.
A.9 To do: Steps follow by a Resolution Professional to find out whether a Transaction falls under Section 43 of IBC.
A.10. Can RP file one composite application under Sections 43, 45 and 66 of the Code and AA decide?
B. Whether transactions in the present case are preferential, falling within the ambit of sub-section (2) of Section 43 IBC.
C. Interpretation of definition of Financial Debt and Financial Creditor.
C.1 The expressions “means and includes” in the definition of Financial Creditor.
C.2 The essentials for financial debt and financial creditor.
C.3 Every secured creditor may not be a financial creditor.
C.4 A person having only security interest over the assets of corporate debtor cannot partake the character of a Financial Debt within the meaning of Section 5(8) of IBC.
C.5 Secured creditors indicated by this Court in Essar Steel and Swiss Ribbons, as being subsumed in financial creditors.
D. Whether Lenders of JAL could be categorised as Financial Creditors of JIL.

Interpretation of Preferential & Undervalued Transactions under Section 43 of IBC| Whether the lender of Holding Company could be recognized as Financial Creditors of the Corporate Debtor (Subsidiary Company/Guarantor) on the strength of the mortgage created by the Corporate Debtor, as collateral security of the debt of its Holding Company – Anuj Jain IRP for Jaypee Infratech Ltd. Vs. Axis Bank Ltd. etc. – Supreme Court Read Post »

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