CIRP-Withdrawal-Settlement-After filing in NCLT but before approval

Can a single lender settle the dues under RBI Framework after admission of insolvency petition? | Can an application for withdrawal from CIRP be entertained after the CoC approves the Resolution Plan? | Is writ petition maintainable even the efficacious statutory remedy under section 60(5) of the IBC available? – Mandava Holdings Pvt. Ltd. Vs. PTC India Financial Services Ltd. – Telangana High Court

The Hon’ble Telangana High Court held that:
(i) The IBC does not provide for such a scenario that the borrowing entity/ Corporate Debtor can negotiate with only one of the creditors in the CoC to the exclusion of the other creditors.
(ii) The RBI Framework recognizes the precedence of the relevant statute (the IBC in this case) and that any settlement must be done within the statutory framework of the IBC.
(iii) The writ petition is also not maintainable in view of the efficacious statutory remedy under section 60(5) of the IBC which is a comprehensive Code envisaging all possible scenarios and modes of redress within the four corners of the IBC.

Can a single lender settle the dues under RBI Framework after admission of insolvency petition? | Can an application for withdrawal from CIRP be entertained after the CoC approves the Resolution Plan? | Is writ petition maintainable even the efficacious statutory remedy under section 60(5) of the IBC available? – Mandava Holdings Pvt. Ltd. Vs. PTC India Financial Services Ltd. – Telangana High Court Read Post »

Whether Adjudicating Authority could have precluded the consideration of the 12A proposal of the Suspended Directors by the CoC on the ground that Resolution Plan was under consideration of NCLT – Pratham Expofab Pvt. Ltd. Vs. Mr. Anil Matta, RP of Primrose Infratech Pvt. Ltd. and Ors. – NCLAT New Delhi

Hon’ble NCLAT while upholding the decision of NCLT held that the suspended management cannot insist, impose or force the consideration of its settlement proposal by the CoC when the CoC in the exercise of its business decision has categorically decided against considering any such proposal from the Appellant.
The Hon’ble Tribunal also held that when a resolution plan has already been received by the CoC and the CoC in the exercise of its commercial wisdom has decided to only consider this plan and has also rejected with majority voting the settlement plan given by the Appellant, no error has been committed by the Adjudicating Authority in disallowing further opportunity to the Appellant to submit a Section 12A proposal

Whether Adjudicating Authority could have precluded the consideration of the 12A proposal of the Suspended Directors by the CoC on the ground that Resolution Plan was under consideration of NCLT – Pratham Expofab Pvt. Ltd. Vs. Mr. Anil Matta, RP of Primrose Infratech Pvt. Ltd. and Ors. – NCLAT New Delhi Read Post »

Supreme Court sets Guidelines for Withdrawal and Settlement of Insolvency Cases under Section 12A of IBC read with CIRP Regulation 30A | Withdrawal application shall be moved through Resolution Professional only and NCLT Rule 11 or NCLAT Rule 11 or even the power under Article 142 no longer arises – GLAS Trust Company LLC Vs. BYJU Raveendran and Ors. – Supreme Court

In this landmark decision, Hon’ble Supreme Court covers following issues:

i. Nature of the proceedings after admission of the application: proceeding in personam or in rem.
ii. Legal framework for withdrawal and settlement of claims.
iii. Four stages of withdrawal of Insolvency cases: A procedure prescribed under the existing framework.
iv. Comprehensive framework to deal with withdrawal and settlement: Rule 11 of the NCLT Rules, or Rule 11 of the NCLAT Rules or even the power under Article 142 no longer arises.
v. Withdrawal application u/s 12A through IRP only, NCLT conducts an adjudicatory exercise and the procedure is not a mere technicality.
vi. Inherent Powers under Rule 11 of NCLT/ NCLAT Rules, 2016.
vii. Meaning of the phrase “any person aggrieved” under Section 61 and Section 62 of IBC.

Supreme Court sets Guidelines for Withdrawal and Settlement of Insolvency Cases under Section 12A of IBC read with CIRP Regulation 30A | Withdrawal application shall be moved through Resolution Professional only and NCLT Rule 11 or NCLAT Rule 11 or even the power under Article 142 no longer arises – GLAS Trust Company LLC Vs. BYJU Raveendran and Ors. – Supreme Court Read Post »

Whether ex-management of the Corporate Debtor can be allowed opportunity to file a proposal under Section 12A of IBC, at the stage of consideration of Resolution Plan, where earlier proposal rejected – Pratham Expofab Pvt. Ltd. and Anr. Vs. Anil Matta RP Primrose Infratech Pvt. Ltd. and Anr. – NCLT New Delhi Bench

Hon’ble NCLT New Delhi Bench held that as now at the stage of consideration of the resolution plan, it is not deemed apt to give yet another opportunity to the Applicant to file a proposal under Section 12A as applicants have not shown bonafide for settlement earlier and it is just a repeated process to derail the approval of the Resolution Plan application.

Whether ex-management of the Corporate Debtor can be allowed opportunity to file a proposal under Section 12A of IBC, at the stage of consideration of Resolution Plan, where earlier proposal rejected – Pratham Expofab Pvt. Ltd. and Anr. Vs. Anil Matta RP Primrose Infratech Pvt. Ltd. and Anr. – NCLT New Delhi Bench Read Post »

Can Shareholder/Promoter of Corporate Debtor submit revise offer increasing settlement value after approval of Rplan by CoC and pending for NCLT approval | Can OTS proposal be rejected on the ground that it extinguishes the personal guarantees of Promoter and Guarantors – Sanjeev Mahajan Vs. Indian Bank (Erstwhile Allahabad Bank) and Ors. – NCLAT New Delhi

In this case, the settlement proposal was with the condition that on approval of the same, liability of CD, Promoter and Guarantors shall stand extinguished, meaning thereby that the Bank has to release the personal guarantees of Promoter and Guarantors.

Hon’ble NCLAT held that:

(i) The decision, which was taken with 100% vote share to reject the settlement proposal of the Appellant, can in no manner be held to be arbitrary.
(ii) When the settlement proposal, which was submitted by the Appellant, which came to be considered by the CoC and was rejected, it is not open for the Appellant, after the approval of Resolution Plan of the SRA and after rejection of settlement proposal of the Appellant by CoC, to sent emails increasing his offer from earlier submitted settlement proposal.

Can Shareholder/Promoter of Corporate Debtor submit revise offer increasing settlement value after approval of Rplan by CoC and pending for NCLT approval | Can OTS proposal be rejected on the ground that it extinguishes the personal guarantees of Promoter and Guarantors – Sanjeev Mahajan Vs. Indian Bank (Erstwhile Allahabad Bank) and Ors. – NCLAT New Delhi Read Post »

In the IBC proceedings, Applicant is not entitled to withdraw the application filed under Section 9 of Insolvency Code at any stage without reason and pray for liberty to file afresh – Florex Tiles Vs. Greenstone Granite Pvt. Ltd. – NCLAT New Delhi

In this case, the NCLT permitted the Appellant to withdraw the Application with cost, however, as no reason is given and withdrawal is sought at belated stage, no liberty granted to file application again.

Hon’ble NCLAT has dismissed appeal holding that:

(i) When an Application under Section 9 proceeded for more than a year, without there being any valid reason, the Appellant, cannot claim as a matter of right that it ought to have been permitted to file a fresh petition under Section 9.
(ii) While in the IBC proceedings, it cannot be held as a matter of right that the Applicant is entitled to withdraw the Application filed under Section 9 at any stage and pray for liberty to file afresh.
(iii) The permission to file fresh suit can be granted only when the Court is satisfied that there is sufficient ground for allowing the plaintiff to institute a fresh suit. The submission that it is automatic and the Court was obliged to grant permission to file fresh suit, cannot be accepted.

In the IBC proceedings, Applicant is not entitled to withdraw the application filed under Section 9 of Insolvency Code at any stage without reason and pray for liberty to file afresh – Florex Tiles Vs. Greenstone Granite Pvt. Ltd. – NCLAT New Delhi Read Post »

If Corporate Debtor defaulted in a settlement which was arrived during pendency of IBC Section 7 application, second petition under Section 7 of IBC on the ground of the settlement agreement is maintainable – Desh Bhushan Jain, Erstwhile Director of Angel Promoters Pvt. Ltd. Vs. Abhay Kumar, IRP of Angel Promoters Pvt. Ltd. and Ors. – NCLAT New Delhi

Hon’ble NCLAT held that:

(i) In the case of Raj Singh Gehlot Vs. Vistra (ITCL) India Ltd. (2022) ibclaw.in 558 NCLAT, the petition under Section 7 was filed on the basis of settlement agreement whereas in the present case, the first petition was not filed on the basis of settlement agreement rather it was filed on the basis of the debt due and default committed by the Corporate Debtor.
(ii) If this kind of tricks, played by the Corporate Debtor with the Financial Creditor are allowed and the plea raised by the Appellant is accepted that the second petition on the ground of settlement agreement is not maintainable then it would give a premium to the unscrupulous Corporate Debtor to get the petition filed under Section 7 withdrawn on the basis of the settlement which was not to be ultimately followed. Definitely, this kind of attitude and act on the part of the Corporate Debtor is not appreciated.

If Corporate Debtor defaulted in a settlement which was arrived during pendency of IBC Section 7 application, second petition under Section 7 of IBC on the ground of the settlement agreement is maintainable – Desh Bhushan Jain, Erstwhile Director of Angel Promoters Pvt. Ltd. Vs. Abhay Kumar, IRP of Angel Promoters Pvt. Ltd. and Ors. – NCLAT New Delhi Read Post »

When Resolution Plan approved by CoC and pending before NCLT, without giving an opportunity to SRA, directions of NCLT to CoC to consider settlement proposal of Suspended Directors, cannot be sustained – One City Infrastructure Pvt. Ltd. Vs. Pratham Expofab Pvt. Ltd. and Ors. – NCLAT New Delhi

Hon’ble NCLAT held that:

(i) In the Application u/s 12A, which was filed by the Ex. Director, where a proposal was submitted for settlement, the Adjudicating Authority ought to have given an opportunity to SRA to submit a response to the Application.
(ii) Adjudicating Authority, ought to have allowed opportunity to SRA to respond to the Application, whose Resolution Plan has been approved by the CoC and which is pending consideration before the Adjudicating Authority. Without giving an opportunity to the Appellant, direction to the CoC to consider the Plan, cannot be sustained.
(iii) The Application for approval of Resolution Plan being pending consideration, it shall be open for the Adjudicating Authority to consider IA No.188 of 2024 along with its objection.

When Resolution Plan approved by CoC and pending before NCLT, without giving an opportunity to SRA, directions of NCLT to CoC to consider settlement proposal of Suspended Directors, cannot be sustained – One City Infrastructure Pvt. Ltd. Vs. Pratham Expofab Pvt. Ltd. and Ors. – NCLAT New Delhi Read Post »

Appeal against NCLAT Principal Bench, New Delhi judgment dated 08.01.2024 has been dismissed – Sanjeev Mahajan Vs. Nehru Place Hotels and Real Estates Pvt. Ltd. and Ors. – Supreme Court

Hon’ble Supreme Court has dismissed appeal filed against the judgment of NCLAT, Principal Bench, New Delhi in the matter of Nehru Place Hotels and Real Estates Pvt. Ltd. v. Sanjeev Mahajan and Ors., reported in (2024) ibclaw.in 14 NCLAT. In NCLAT judgments, a question was whether a settlement proposal under Sec. 12A of IBC, 2016 be allowed after a Resolution Plan has been approved by CoC and pending before NCLT for Approval?

Appeal against NCLAT Principal Bench, New Delhi judgment dated 08.01.2024 has been dismissed – Sanjeev Mahajan Vs. Nehru Place Hotels and Real Estates Pvt. Ltd. and Ors. – Supreme Court Read Post »

Whether a settlement proposal under Sec. 12A of IBC, 2016 be allowed after a Resolution Plan has been approved by CoC and pending before NCLT for Approval? – Nehru Place Hotels and Real Estates Pvt. Ltd. Vs. Sanjeev Mahajan (Suspended Director) and Ors. – NCLAT New Delhi

Hon’ble NCLAT held that the Adjudicating Authority committed error in giving an opportunity to Respondent No. 1 to arrive at acceptable settlement. Application for approval of the Resolution Plan which has already been filed and pending consideration, the Adjudicating Authority ought to have considered and decided the Application for approval of the plan.

Whether a settlement proposal under Sec. 12A of IBC, 2016 be allowed after a Resolution Plan has been approved by CoC and pending before NCLT for Approval? – Nehru Place Hotels and Real Estates Pvt. Ltd. Vs. Sanjeev Mahajan (Suspended Director) and Ors. – NCLAT New Delhi Read Post »

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