2017 (10) TMI 1448 - Tri - Insolvency and Bankruptcy

Meeting of COC being conducted which appears to be a sensitive issue - HELD THAT - The RP as well as to the COC is directed to convey the meeting of COC in the first week of November and to peruse and consider the legal opinion as received b the RP from various sources and to take conscious decision thereon further the present applicant EXIM Bank should also be given opportunity to put forth its stand before the COC as well as the view of the RP also to be taken into consideration and thus the COC has to take collective decision. The matter be listed on 10th November, 2017 for reporting compliance of the direction issued.

Summary

Issues:
1. Exclusion of EXIM Bank from the Committee of Creditors (COC) and its status as a financial creditor.
2. Legality and validity of the decision taken by the Resolution Professional (RP) without active consultation with other COC members.
3. Procedure and practice adopted by the RP in conducting COC meetings.

Analysis:
1. The Tribunal observed that the decision of the RP to exclude the EXIM Bank from the COC and not treat it as a financial creditor is prima facie not legally sustainable. The RP is expected to interact effectively with COC members to collectively work on a resolution plan in the best interest of the company under resolution. The Tribunal emphasized the importance of active consultation and collective decision-making within the COC.

2. The Tribunal found that the RP's decision seemed to be based on legal opinions without active involvement of other COC members. The decision was communicated to the EXIM Bank before the COC meeting, indicating a lack of formal consultation. The Tribunal highlighted the need for collective responsibility of the RP and COC in reaching reasonable conclusions to protect the company's interests. It directed the COC to reconsider the legal opinion and make a collective decision, emphasizing the essence of time under the Insolvency and Bankruptcy Code.

3. The Tribunal directed the RP and COC to convene a meeting in the first week of November to review the legal opinion and make a conscious decision regarding the status of the EXIM Bank. It allowed the EXIM Bank to present its stance before the COC, with the RP's views also considered in the decision-making process. In case of serious differences among COC members, other financial creditors were permitted to express independent views for the Court's consideration. The Tribunal kept the RP's order excluding the EXIM Bank from the COC in abeyance until the next hearing scheduled for compliance reporting on 10th November 2017.