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2020 (10) TMI 385 - Tri - Insolvency and BankruptcyConversion of claim - financial claim has been converted to an operational one - It is submitted that till the 6th COC, the RP had considered their claim as a financial one, but subsequently converted, it to an operational one - HELD THAT - This Bench is of the opinion that the claim of the Greater Noida Authority can unequivocally be categorised as being an ''operational debt . We therefore do not find any infirmity in the decision of the Resolution Professional who has deemed it justified to amend and correct the claim of the Greater Noida Authority from one of financial claim to an operational debt . Accordingly, the CoC which has been reconstituted upon amending the aforesaid claim, consisting of home buyers as financial creditors along with other Financial Creditors, if any, would be vested with the voting rights to the exclusion of Greater Noida Authority. As the pending objections have been dismissed, arguments on the Resolution Plan be addressed on the next date. To come up on 11th March, 2020.
Issues:
1. Conversion of financial claim to operational claim by Resolution Professional. 2. Determination of claim categorization - financial or operational. 3. Voting rights of Greater Noida Authority in the Committee of Creditors (CoC). 4. Interpretation of lease agreements in insolvency proceedings. 5. Applicability of Supreme Court decisions on lease rent as operational debt. Issue 1: Conversion of financial claim to operational claim by Resolution Professional The Greater Noida Authority raised an objection regarding the conversion of their financial claim to an operational one by the Resolution Professional (RP). They argued that this conversion prejudiced their interests in terms of voting power and claim recovery. The RP defended the conversion, stating it was rightly done. The Tribunal had to determine whether the RP's decision to convert the claim was appropriate. Issue 2: Determination of claim categorization - financial or operational The Greater Noida Authority claimed that the land provided to the Corporate Debtor should be considered a financial lease, making them a financial creditor. However, a previous Tribunal decision and the interpretation of operational creditors as those involved in the operations of the Corporate Debtor were cited. The RP argued that lease rent falls under operational debt as per the Insolvency and Bankruptcy Code. The Tribunal had to decide whether the Authority's claim qualified as an operational debt. Issue 3: Voting rights of Greater Noida Authority in the Committee of Creditors (CoC) The Greater Noida Authority sought directions to the RP to reconsider their claim as a financial one to regain their voting rights in the CoC. The Tribunal reviewed relevant guidelines and precedent cases to determine whether the Authority could be considered a financial creditor entitled to voting rights in the CoC. Issue 4: Interpretation of lease agreements in insolvency proceedings The Tribunal analyzed the nature of the lease agreements between the Greater Noida Authority and the Corporate Debtor to ascertain the categorization of the claim. Previous decisions and accounting standards were considered to determine whether the Authority's claim could be classified as a financial lease, impacting their status as a financial creditor. Issue 5: Applicability of Supreme Court decisions on lease rent as operational debt The RP cited Supreme Court decisions and provisions of the Insolvency and Bankruptcy Code to support their argument that lease rent constitutes operational debt. The Tribunal reviewed these arguments in light of relevant legal precedents and determined whether the Authority's claim fell under the definition of operational debt. In conclusion, the Tribunal upheld the RP's decision to convert the Greater Noida Authority's claim to an operational debt, thereby excluding them from voting rights in the CoC. The Tribunal found no infirmity in the RP's decision and scheduled further proceedings regarding the Resolution Plan approval. The judgment highlighted the importance of correctly categorizing claims in insolvency proceedings and the application of legal principles to determine creditor rights.
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