Rplan-Payment to Related parties in Resolution Plan

The right to maintenance will be superior to and have overriding effect than the statutory rights afforded to Financial Creditors, Secured Creditors, Operational Creditors or any other such claimants encompassed within the SARFAESI Act, 2002, the Insolvency and Bankruptcy Code, 2016 (IBC) or similar such laws – Apurva @ Apurvo Bhuvanbabu Mandal Vs. Dolly and Ors. – Supreme Court

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The right to maintenance will be superior to and have overriding effect than the statutory rights afforded to Financial Creditors, Secured Creditors, Operational Creditors or any other such claimants encompassed within the SARFAESI Act, 2002, the Insolvency and Bankruptcy Code, 2016 (IBC) or similar such laws – Apurva @ Apurvo Bhuvanbabu Mandal Vs. Dolly and Ors. – Supreme Court Read Post »

There is no provision of the IBC, which mandates that the related party should be paid in parity with unrelated party – West Coast Paper Mills Ltd. Vs. Bijay Murmuria, RP of Fort Gloster Industries Ltd. and Ors. – NCLAT New Delhi

Hon’ble NCLAT held that there was no provision of the IBC, which mandates that the related party should be paid in parity with unrelated party. Any prohibition of differential payment to different class of creditors in the resolution plan is ultimately, subject to the commercial wisdom of CoC and no fault can be attached to the resolution plan merely for not making provisions for a related party, so long as provision of the IBC and CIRP regulations are met.

There is no provision of the IBC, which mandates that the related party should be paid in parity with unrelated party – West Coast Paper Mills Ltd. Vs. Bijay Murmuria, RP of Fort Gloster Industries Ltd. and Ors. – NCLAT New Delhi Read Post »

Related Parties cannot claim entitlement of any amount in Resolution Plan and cannot claim any discrimination with regard to payments to unrelated Unsecured Financial Creditors – Manav Investments and Trading Co. Ltd. Vs. Pratim Bayal and Ors. – NCLAT New Delhi

Hon’ble NCLAT refers M.K. Rajagopalan v. Dr. Periasamy Palani Gounder and Anr. (2023) ibclaw.in 60 SC and holds that
(i) Both the Appellants who have filed these Appeals are related parties. Related parties cannot claim entitlement of any amount in the plan and cannot claim any discrimination with regard to payments to unrelated unsecured Financial Creditors.
(ii) Insofar as the submission that distribution is not in accordance with vote share which violates Section 53 r/w Section 32 (b) of the IBC, the said submission need no consideration since the Appellant being related party is not entitled for any distribution and no stakeholder who is entitled for distribution is aggrieved by the decision of the Committee of Creditors regarding mode and manner of distribution.
(iii) With regard to discrimination in payments to the workers and employees, no workers and employees have any grievance nor any workers and employees is dissatisfied with the payments made under the plan to them nor have they come in Appeal.
(iv) Upheld decision of NCLT Kolkata Bench.

Related Parties cannot claim entitlement of any amount in Resolution Plan and cannot claim any discrimination with regard to payments to unrelated Unsecured Financial Creditors – Manav Investments and Trading Co. Ltd. Vs. Pratim Bayal and Ors. – NCLAT New Delhi Read Post »

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

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 »

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