IBC provides an enabling framework for CoC to approve a Resolution Plan which provides that all securities for any debt due to the Secured Creditors can be unconditionally released and transferred in favour of Corporate Debtor – Punjab National Bank Vs. Sandwoods Infratech Projects (P) Ltd. Through Shri Ravinder Kumar Goel, RP and Ors. – NCLAT New Delhi
January 11, 2024
In this landmark decision of Hon’ble NCLAT, the Bench clarifies that CoC can approve a resolution plan of any Corporate Debtor which provides that all securities for any debt due to the secured creditors can be unconditionally released and transferred in favour of the Corporate Debtor. Appellant pointed out that Clauses of the resolution plan provided that all securities for any debt due to the secured creditors shall stand unconditionally released and transferred in favour of the Corporate Debtor, which would adversely affect the recovery proceedings from the guarantors and collateral securities of third parties thereby making the resolution plan arbitrary. Hon’ble Bench holds that: (i) The scheme as delineated by Regulation 37 of CIRP Regulations fully supports the view that if a claim is filed by a Financial Creditor and the claims of the Financial Creditor is part of the CIRP, their security interest can very well be dealt with in the resolution plan. (ii) From the ratio laid down by this Tribunal in Edelweiss Asset Reconstruction Company Ltd. v. Mr. Anuj Jain and Ors. (2023) ibclaw.in 420 NCLAT and ICICI Bank Ltd v BKM Industries Ltd and Anr. (2023) ibclaw.in 716 NCLAT, it is amply clear that the statutory construct of the IBC read with Regulation 37 of CIRP Regulations provides an enabling framework for CoC to exercise its commercial wisdom to approve a resolution plan of any Corporate Debtor which provides that all securities for any debt due to the secured creditors can be unconditionally released and transferred in favour of the Corporate Debtor.