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2021 (5) TMI 780 - Tri - Insolvency and BankruptcySeeking replacement of Financial Creditors - Assignment of debt by Financial Creditors to applicant - Applicant seeking to continue prosecuting the instant proceedings against the Respondents/Personal Guarantors, in place of the Respondent No. 1/Financial Creditor etc - Section 60(5)(C) of the IBC, 2016, R/w Rule 11 of the NCLT Rules, 2016 - HELD THAT - The learned Counsel for the Respondent No. 1/Financial Creditor has submitted that the debt in question has been assigned to the Applicant i.e. Assets Care Reconstruction Enterprise Ltd. in place of Respondent No. 1/Financial Creditor i.e. M/s. Altico Capital India Ltd. against the Respondent No. 2 and 3/Corporate Debtors i.e. Mr. Vinay K Mehta and Mr. Prateek K Mehta respectively. He has also submitted in his Memorandum dated 22.04.2021 that the Respondent No. 1/Financial Creditor has no objections to the Applicant being substituted in the place of the Respondent No. 1/Financial Creditor. Respondent Nos. 2 and 3 against whom the Petition has been filed u/s. 9 of the Code have no objection. In view of the foregoing the application deserves to be allowed. Application is allowed by substituting the Applicant, namely, M/s. Assets Care and Reconstruction Enterprise Ltd. in place of Respondent No. 1/Financial Creditor, namely, M/s. Altico Capital India Ltd. and also permitting the Applicant to continue prosecuting the instant proceedings against the Respondents/Personal Guarantors, in place of Respondent No. 1/Financial Creditor.
Issues:
Substitution of Applicant in place of Financial Creditor in ongoing insolvency proceedings under IBC, 2016. Analysis: The judgment revolves around I.A. No. 107 of 2021 in C.P. (IB) No. 104/BB/2020, where M/s. Assets Care and Reconstruction Enterprise Ltd. sought to replace Respondent No. 1/Financial Creditor and continue pursuing the case against the Personal Guarantors. The Applicant, an asset reconstruction Company, claimed ownership of the Facility and the right to recover amounts due under the Guarantee, following an assignment agreement dated 04th March 2021. The assignment was executed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002, granting the Applicant full ownership and enforcement rights over the Facility. The Respondent No. 1 acknowledged the assignment of the Financial Debt to the Applicant through an Assignment Agreement, transferring all rights, title, and interests over the Facility, including the personal guarantees provided by the other Respondents. The Respondent No. 1 expressed no objections to the Applicant's substitution and continuation of the proceedings against the Personal Guarantors. The Respondent No. 1 confirmed that the Applicant, as the full owner of the Facility, had the legal right to prosecute and enforce the ongoing proceedings post-assignment. After considering the arguments and submissions from both parties, the Tribunal found merit in allowing the substitution of the Applicant for the Financial Creditor in the ongoing proceedings. The Tribunal noted the lack of objections from the Respondent No. 1 and the Personal Guarantors against whom the petition was filed. Consequently, the Tribunal granted the application, allowing M/s. Assets Care and Reconstruction Enterprise Ltd. to replace M/s. Altico Capital India Ltd. as the Financial Creditor and continue pursuing the case against the Personal Guarantors. No costs were awarded in the judgment. In conclusion, the Tribunal's decision in this case highlights the importance of legal assignments and the rights bestowed upon assignees, ensuring a smooth transition of ownership and enforcement rights in ongoing insolvency proceedings under the Insolvency and Bankruptcy Code, 2016.
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