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2019 (9) TMI 1368 - Tri - IBCRefusal to grant voting right to the applicant in terms of Section 5(28) of the Insolvency Bankruptcy Code, 2016 by Resolution Professional (RP) - HELD THAT - It is accepted by the applicant that its claim was filed only after the decision of the Hon ble NCLAT in the case of Andhra Bank (supra). The claim has been admitted. However, voting rights were not given by the RP on the ground that the debt has not crystallised and as such the voting rights cannot be determined. Hon ble NCLAT in the case of Andhra Bank 2018 (7) TMI 1896 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI has held that admittedly, the corporate debtor has counter indemnity obligation in respect of guarantee given by it to Andhra Bank and held that the Andhra Bank comes within the definition of financial creditor as defined under Sections 5(7) r/w (8) of the Code. The present position of the resolution process is therefore, akin to the position of the resolution process on the date when the Hon ble NCLAT passed order dated 13.07.2018. The claim of the present applicant that it comes within the definition of financial creditor under Section 5(7) of the Code is based upon the decision dated 13.07.2018 of the Hon ble NCLAT. Extension of CIRP Period - The directions of Hon ble NCLAT were that only if the resolution plan is not in accordance with Section 30(2) then a valid objection can be raised by Andhra Bank who has been added as a member of CoC otherwise the CoC will approve it having already found it to be viable and workable. However, SBI did not approve the original resolution plan on the ground that the offer by the resolution applicant in the original resolution plan is much lower than the liquidation value of the corporate debtor - It is considered reasonable to accept the contention of the resolution applicant that the CoC be directed to consider the resolution plan of the resolution applicant. As recorded in order dated 30.08.2019, SBI has conveyed its no objection for holding a fresh meeting to consider revised resolution plan by the resolution applicant. CIRP process is stayed by a court of law or the Adjudicating Authority or the Appellate Tribunal or the Hon ble Supreme Court.
Issues Involved:
1. Voting rights of financial creditors under the Insolvency & Bankruptcy Code, 2016. 2. Admittance of claims by corporate guarantee holders. 3. Consideration and approval of the resolution plan. 4. Extension of the Corporate Insolvency Resolution Process (CIRP) period. 5. Liquidation process initiation. Issue-wise Detailed Analysis: 1. Voting Rights of Financial Creditors: The applicant, Phoenix ARC Pvt. Ltd., filed CA No.406/2018 to set aside the minutes of the 9th CoC meeting held on 16.08.2018, where the Resolution Professional (RP) refused to grant voting rights to the applicant. The RP argued that under Section 5(28) of the Insolvency & Bankruptcy Code, 2016, the financial creditor is entitled to voting rights proportional to the debt owed, which had not crystallized in this case. The Tribunal referenced the NCLAT decision in the case of Andhra Bank, which held that corporate debtors have counter indemnity obligations for guarantees given, thus qualifying as financial creditors under Sections 5(7) and 5(8) of the Code. 2. Admittance of Claims by Corporate Guarantee Holders: The RP initially rejected the claims of corporate guarantee holders, including the applicant, on the grounds that the debt was not crystallized. However, following the NCLAT's decision in the Andhra Bank case, the RP admitted the claims of all corporate guarantee holders in accordance with the lead banker’s claim. The Tribunal directed that the applicant should have voting rights in the CoC meeting, similar to those granted to Andhra Bank, as per the NCLAT's order. 3. Consideration and Approval of the Resolution Plan: The resolution plan submitted by M/s New Ram Traders was discussed in the 14th CoC meeting, where it was noted that the offer was lower than the liquidation value, leading to its rejection. The Tribunal emphasized that objections to the resolution plan could only be raised if it did not comply with Section 30(2) of the Code. The Tribunal directed the resolution applicant to submit a final revised resolution plan, which the RP was to present to the CoC for consideration. 4. Extension of the CIRP Period: The resolution applicant, New Ram Traders, filed CA No.607/2018 to extend the CIRP period until 03.01.2019 or until the CoC's decision on the revised plan. The Tribunal noted the Supreme Court's stance that time taken in legal proceedings should be excluded from the 270-day computation for the CIRP. Consequently, the Tribunal excluded the period from the NCLAT's order on 13.07.2018 until the present date, granting an additional month for completing the process. 5. Liquidation Process Initiation: The RP filed CA No.587/2018 to initiate the liquidation process under Section 33 of the Code, as the approved resolution plan was rejected by the CoC. The Tribunal directed that if no revised resolution plan is received within one month, the Adjudicating Authority (AA) should consider appropriate suo moto action for liquidation. Conclusion: The Tribunal disposed of CA No.406/2018 by granting the applicant voting rights in the CoC meeting. CA No.607/2018 was disposed of with directions for the submission and consideration of a final revised resolution plan within a specified timeframe, excluding the period from the NCLAT's order to the present date from the CIRP timeline. The Tribunal emphasized the importance of adhering to the Code's objectives and timelines, while also considering the need for a fair resolution process.
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