2020 (1) TMI 1546 - AT - Insolvency and Bankruptcy

Seeking approval of Resolution Plan - re-negotiation over the decision of Committee of Creditors - HELD THAT - It is a settled law that the Resolution Applicant has no right for renegotiation or further negotiation. After submission of the Resolution Plan , if it is found in order and in accordance with Section 30(2), it is required to be placed before the Committee of Creditors. The process of evaluation is guided by the said criteria as set out in the Request for Resolution Plan . If the evaluation criteria suggest that only top three Resolution Applicants should be negotiated, the Appellant who ranked 6th among the Resolution Applicants cannot have any right to participate for re-negotiation over the decision of the Committee of Creditors . In COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS 2019 (11) TMI 731 - SUPREME COURT , the Hon ble Supreme Court held that the commercial aspects of a Resolution Plan , its viability or otherwise, and, distribution of proceeds amongst stakeholders, were to be looked only by the Committee of Creditors who are competent to go through all relevant aspects. Therefore, this Appellate Tribunal cannot deliberate on such issue. In the present case, as no ground has been made out in terms of Section 61(3), we are not inclined to interfere with the Resolution Plan of 3rd Respondent duly approved by the Adjudicating Authority - Appeal dismissed.

Summary

Issues involved:
Challenge to approval of Resolution Plan by Adjudicating Authority, Evaluation process transparency, Right to renegotiation for Resolution Applicant, Compliance with evaluation criteria, Competence of Committee of Creditors in commercial aspects review, Grounds for challenging approved Resolution Plan.

Detailed Analysis:

1. Challenge to Approval of Resolution Plan:
The Appellant, a Resolution Applicant, challenged the approval of the Resolution Plan submitted by the 3rd Respondent by the Adjudicating Authority. The Appellant contended that it had sought to enhance its financial proposal after the 3rd Respondent's plan was approved but was rejected. The Adjudicating Authority approved the 3rd Respondent's plan while dismissing the Appellant's offer.

2. Evaluation Process Transparency:
The Appellant argued that the evaluation process conducted by the Resolution Professional lacked transparency and did not afford the Appellant an opportunity to present its plan to the Committee of Creditors. The Appellant claimed that the Resolution Professional did not follow the stipulated steps in the Request for Resolution Plan (RFRP) and did not consider the Appellant's proposal properly.

3. Right to Renegotiation for Resolution Applicant:
The Appellant asserted its right to renegotiate its proposal even after submission, especially when willing to enhance its offer beyond the amount proposed by the successful Resolution Applicant. The Appellant argued that if a revised proposal surpasses the initial offer, the Committee of Creditors should consider it in the stakeholders' interest.

4. Compliance with Evaluation Criteria:
The Appellant contended that being ranked 6th among Resolution Applicants should not disqualify it from participating further in the resolution process. The Appellant emphasized that a revised plan is a continuation of the original plan and should be considered if beneficial to stakeholders.

5. Competence of Committee of Creditors in Commercial Aspects Review:
The Appellant referred to a precedent to suggest that the Committee of Creditors can review commercial aspects of a Resolution Plan before the stipulated time frame. The Appellant argued that the Committee of Creditors should consider revised plans if advantageous to stakeholders.

6. Grounds for Challenging Approved Resolution Plan:
The judgment highlighted the specific grounds under Section 61(3) for challenging an approved Resolution Plan, emphasizing that interference is warranted only if the plan contravenes laws, shows irregularities, lacks provision for operational creditors, neglects insolvency resolution costs, or fails to meet Board-specified criteria.

In conclusion, the Appellate Tribunal dismissed both appeals as no grounds under Section 61(3) were established to challenge the approved Resolution Plan of the 3rd Respondent. The judgment underscored the importance of adherence to evaluation criteria, Committee of Creditors' competence in reviewing commercial aspects, and the limited scope for interference in approved Resolution Plans unless specific legal grounds are violated.