Summary
A successful resolution applicant challenged the NCLAT’s direction to increase payment to a dissenting financial creditor to match other creditors. Considering the January 2017 commencement of insolvency proceedings, the plan’s treatment under the earlier regulation, its value above liquidation value and its otherwise final approval, the Court restored the NCLT’s order.
Issues
- Whether the NCLAT was justified in requiring the successful resolution applicant to match the payout to other financial creditors for the dissenting creditor in the circumstances of this plan.
Provisions considered
- Section 30, Insolvency and Bankruptcy Code, 2016Examined the resolution professional’s duties, plan requirements and creditor approval in the statutory text reproduced in the judgment. (¶¶ 10, 11)
- Regulation 38(1) and (1A), IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016Compared the earlier requirement for liquidation-value payment to dissenting financial creditors with the October 2018 amendment. (¶¶ 11, 12, 13)
Held
- The resolution process commenced in January 2017, before the amendment. The plan offered Rs 54 crore against a liquidation value of Rs 36 crore and, apart from the dissenting creditor’s objection, had attained finality. In these circumstances the broad direction to match payouts to other financial creditors was unjustified. (¶ 13)
- The NCLAT’s order and directions were set aside and the NCLT’s approval of the resolution plan was restored. (¶¶ 13, 14)
Result
Appeal allowed; the NCLAT’s order was set aside and the NCLT’s order restored. No order as to costs.