2019 (8) TMI 1711 - AT - Insolvency and Bankruptcy

Validity of Resolution plan - Withdrawal of CIRP application filed under Section 9 - 90% voting shares of the Committee of Creditors were received for approval (of withdrawal) - HELD THAT - The Allottees (Home Buyers) are also Members of the Committee of Creditors , therefore, while calling meeting of the Committee of Creditors , they should also be called for voting in accordance with the existing provisions of law. In that view of the matter, it is the Resolution Professional to place the proposal of Appellant/ Promoters before the Committee of Creditors . If necessary, the date of meeting of the Committee of Creditors be fixed in the manner as prescribed under the Regulations and information be given to the Financial Creditors including the allottees to take part - The Committee of Creditors will consider the same taking into consideration the interest of the Allottees and will also take into consideration the viability and feasibility of the proposal. Bank Guarantee - HELD THAT - It is clear that if the Committee of Creditors approves the proposal with 90% voting shares, it may also ask the Promoters to give Bank Guarantee, as it may propose, failing which the Applicant, who has filed the application under Section 9, may not make prayer for withdrawal of the application. Place the case for orders on 4th September, 2019.

Issues:
1. Exclusion of period for accepting a Resolution Plan
2. Proposal by Appellant/Promoters not placed before the Committee of Creditors
3. Role of Resolution Professional in placing the proposal before the Committee of Creditors
4. Consideration of the proposal by the Committee of Creditors
5. Requirement of Bank Guarantee if proposal approved by 90% voting shares of Committee of Creditors

Analysis:
1. The judgment addresses the issue of excluding the period for accepting a Resolution Plan in a case related to real estate with numerous allottees (Home Buyers) as members of the Committee of Creditors. The Tribunal directs that the Appellant's proposal should be presented to the Committee of Creditors for consideration under Section 12A of the Insolvency and Bankruptcy Code, 2016. The Tribunal emphasizes the importance of the Committee of Creditors' approval with 90% voting shares before deciding on the withdrawal of the application under Section 9 or the consideration of proposed Resolution Plans.

2. The Tribunal notes that the proposal by the Appellant/Promoters was not placed before the Committee of Creditors by the Resolution Professional due to a technical objection regarding the Promoters' eligibility to file under Section 12A of the Insolvency and Bankruptcy Code, 2016. The Tribunal rejects this objection and clarifies that the Promoters have the authority to settle matters with all creditors, including the Allottees. Therefore, the Resolution Professional is directed to present the proposal before the Committee of Creditors, ensuring the participation of all relevant parties, including the Allottees.

3. Regarding the Resolution Professional's role, the Tribunal mandates the Resolution Professional to place the Appellant/Promoters' proposal before the Committee of Creditors for evaluation. The Tribunal emphasizes that the Allottees, being members of the Committee of Creditors, should be included in the decision-making process. The Resolution Professional is instructed to schedule a meeting of the Committee of Creditors following the regulations and inform all creditors, including the allottees, to participate.

4. The Committee of Creditors is tasked with considering the proposal, taking into account the interests of the Allottees, as well as assessing the viability and feasibility of the proposal. The Tribunal underscores the importance of a thorough evaluation by the Committee of Creditors to ensure the best interests of all stakeholders involved.

5. In the event that the Committee of Creditors approves the proposal with 90% voting shares, the Tribunal highlights the potential requirement for the Promoters to provide a Bank Guarantee as proposed by the Committee. Failure to comply with this requirement may impact the withdrawal of the application under Section 9. The Tribunal expects the Resolution Professional to convene a meeting of the Committee of Creditors promptly to make a decision within three weeks, with the understanding that the appeal will proceed to a merit-based hearing if the proposal is rejected. The parties are instructed to provide updates on the case's progress for the next hearing scheduled on 4th September 2019.

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