2021 (6) TMI 651 - AT - Insolvency and Bankruptcy

Financial Creditors claiming to be part of CoC - Financial Creditors claimed to be assignees of financial debt - It is claimed that the Appellants would constitute 68% of the CoC and thus they have an important stake involved - HELD THAT - It appears that there are various disputes raised including issues relating to the admission of the claim of the Appellants are the issues. It also appears from Company Appeal (AT) (Insolvency) No. 385 of 2021 that the Interim Resolution Professional (IRP) had rather recorded that there were dues and recoverables from the Appellant. It also appears that there is dispute regarding the Appellants to be related parties. All these issues are yet to be decided one way or the other by the Adjudicating Authority. It would not be appropriate for us to entertain the present appeals against the impugned orders as stated above, on the basis that holding of CoC should have been stayed. When the Corporate Insolvency Resolution Process has already consumed so much of time considering the objects of the Insolvency and Bankruptcy Code, 2016, it would not be appropriate to stay the holding of meetings of the CoC. The Counsel for the Appellants claim that now the Applications before the Adjudicating Authority are fixed on 11th June, 2021. They request that the direction may be given to the Adjudicating Authority to decide the applications one way or the other on 11th June, 2021 - It was also claimed by the Learned Counsel for the Appellants that the CoC meeting has been held on 23rd May, 2021 and even if any further meetings take place whatever they decide should be subject to outcome of the applications filed by the Appellants. Although the Learned Counsel for the Appellants making such request, it is not necessary for us to deal with this particular subject as it remains matter of law to be looked into at appropriate stage. Appeal disposed off with a request to the Adjudicating Authority to consider and decide the applications which are pending at the earliest so that the Corporate Insolvency Resolution Process continues smoothly.

Summary

Issues:
1. Appellants claiming to be part of the Committee of Creditors (CoC) as assignees of financial debt.
2. Interim stay granted by the Adjudicating Authority in earlier filed applications.
3. Challenge to the decision of the Resolution Professional regarding related party status.
4. Appeal against orders passed on various Interim Applications (IAs).
5. Disputes regarding admission of claims and related party status in Corporate Insolvency Resolution Process (CIRP).
6. Request for interim relief to stay CoC meetings pending resolution of pending applications.

Analysis:

1. The Appeals were filed by two Financial Creditors asserting their right to be part of the Committee of Creditors (CoC) as assignees of financial debt, claiming a significant stake of 68% in the CoC. The Appellants sought to challenge the decision of the Resolution Professional regarding their classification as 'related parties' in the ongoing Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.

2. Earlier, an Interim Application (IA) was filed by the Appellants, which became infructuous, leading to subsequent filings of IAs 2286 and 2275 of 2021. The Adjudicating Authority granted time for filing replies and listed the matters for further hearing, emphasizing the need for procedural compliance and orderly resolution of disputes within the CIRP framework.

3. The Adjudicating Authority dismissed IA 2167 of 2021 as infructuous, highlighting the importance of timely communication and compliance with decisions made by the Resolution Professional. This dismissal reflected the evolving nature of the proceedings and the need for efficient case management to prevent unnecessary delays.

4. Orders were passed on IA 2275 of 2021, granting time for filing replies and listing the matter for future hearings. The Appeals were filed against these orders, seeking interim relief to stay CoC meetings pending resolution of pending applications and disputes related to claim admission and related party status.

5. The Tribunal acknowledged the complexities of the ongoing CIRP against the Corporate Debtor and the various disputes raised, including issues concerning the admission of claims and related party classification. Emphasizing the need for expeditious resolution, the Tribunal declined to entertain the Appeals seeking a stay on CoC meetings, urging cooperation and timely decision-making by the Adjudicating Authority.

6. The Tribunal disposed of the Appeals with a directive to the Adjudicating Authority to promptly decide the pending applications to ensure the smooth continuation of the Corporate Insolvency Resolution Process. The parties were urged to cooperate and adhere to the established legal procedures for the effective resolution of the ongoing disputes within the CIRP framework.