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2020 (6) TMI 491 - AT - IBCApproval of Resolution Plan - liquidation of the Corporate Debtor - HELD THAT - The Appellant cannot derive advantage of clause 15.3(b) of the Agreement as the provisions of the 'I B Code' can prevail over such agreement. Finally, if no arrangement or Scheme framed under sections 230-232 of the Companies Act, 2013 becomes possible or the 'Corporate Debtor' is not sold in its totality along/with the employees as ordered by this Appellate Tribunal in Y. Shivram Prasad 2019 (5) TMI 386 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI and there is no option but to sell the assets of the 'Corporate Debtor' and to distribute the same amongst the Creditors in terms of Section 53 read with Section 52 of the 'I B Code', at that stage, the Appellant may ask the Liquidator to return the assets i.e. Plant Machinery, if it belongs to it as the third party. Appeal dismissed.
Issues:
1. Reconsideration of Resolution Plan by the Adjudicating Authority 2. Liquidation of Corporate Debtor 3. Ownership of Plant & Machinery by Appellant 4. Termination of Agreement under I&B Code Reconsideration of Resolution Plan: The judgment involves multiple appeals challenging the rejection of Resolution Plans under the Insolvency and Bankruptcy Code. The Appellants, M/s. B.R. Traders and M/s. K.K. Foods, submitted Resolution Plans below the Liquidation Value of the Corporate Debtor's assets. The Adjudicating Authority and Committee of Creditors rejected the Plans citing non-viability and non-feasibility. The Court upheld the rejection, emphasizing that any Plan below the Liquidation Value contravenes Section 30(2) of the I&B Code, which aims to maximize asset value and balance creditor interests. The objective is to promote entrepreneurship and ensure timely resolution. Liquidation of Corporate Debtor: The judgment also addresses the liquidation order of the Corporate Debtor, M/s. Oceanic Tropical Fruits Pvt. Ltd. The Adjudicating Authority approved liquidation due to the lack of viability in the Resolution Plans. The Court supported this decision, highlighting the importance of completing the insolvency resolution process within the stipulated time frame. It stressed that delays reduce asset value and undermine the Code's objectives. Liquidation was deemed appropriate in the absence of feasible Resolution Plans. Ownership of Plant & Machinery by Appellant: Another issue pertains to the ownership of Plant & Machinery by Appellant, Pepsico India Holdings Pvt. Ltd. The Appellant claimed ownership based on a termination clause in the Agreement triggered by the Corporate Debtor's insolvency. However, the Resolution Professional argued that post-insolvency, termination was not permissible under the I&B Code as preserving the Corporate Debtor's value is paramount. The Court ruled that until the claim and counterclaim disputes are resolved, the handover of assets is premature. Termination of Agreement under I&B Code: The judgment clarifies that the I&B Code provisions supersede contractual agreements like the termination clause invoked by Pepsico India Holdings Pvt. Ltd. The Code mandates preserving the Corporate Debtor's value and exploring revival options before resorting to liquidation. The Court emphasized that liquidation should be a last resort after all revival efforts fail. The Liquidator must ensure the Corporate Debtor remains a going concern and explore restructuring options before asset sale. In conclusion, the Court dismissed all appeals, emphasizing adherence to the I&B Code's objectives, maximizing asset value, and balancing stakeholder interests. Liquidation was upheld as a legitimate outcome in the absence of viable Resolution Plans, and contractual clauses were subject to the Code's provisions for preserving Corporate Debtor value and exploring revival options before liquidation.
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