2021 (6) TMI 1028 - AT - Insolvency and Bankruptcy

Challenge to Approval of Resolution Plan - HELD THAT - Without rights claimed by Appellant being adjudicated before Adjudicating Authority, Appellant cannot maintain challenge to approval of Resolution Plan by way of Appeal. No comments are made on the merits of rival claims. Suffice it to state that the Appellant third party is trying to maintain this appeal challenging the Resolution Plan approved, without getting decided I.A. No. 929 of 2021, one way or other. The appeal is disposed of as premature with liberty to the Appellant to raise admissible issues.

Summary

Issues:
Challenge to approval of Resolution Plan by a third party unconnected with the CIRP of the Corporate Debtor, Impact of Resolution Plan on contractual arrangements and shareholder rights, Application filed by the Appellant opposing certain reliefs sought by the Resolution Applicant, Adjudication of the Appellant's Application by the Adjudicating Authority, Approval of Resolution Plan without deciding the Appellant's pending application, Rights of third party to question the Resolution Plan, Maintenance of appeal challenging the Resolution Plan without deciding the pending application.

Analysis:
The judgment revolves around the challenge to the approval of a Resolution Plan by a third party, the Appellant, who is unrelated to the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor. The Appellant, a 49% shareholder in a Joint Venture Company with the Corporate Debtor, raised concerns about the Resolution Plan impacting its contractual arrangements and shareholder rights. The Appellant argued that certain reliefs sought by the Resolution Applicant would affect its future liabilities and put option rights, which were contested in the Appellant's pending application before the Adjudicating Authority.

The Appellant's application, I.A. No. 929 of 2021, sought protection against any unilateral modification or termination of agreements with the Corporate Debtor. The Appellant requested specific orders to confirm the non-alteration of its rights and obligations under existing agreements. Despite the pending nature of the Appellant's application, the Adjudicating Authority approved the Resolution Plan, prompting the Appellant to challenge the approval through an appeal.

During the proceedings, various counsels representing the Respondents, including the Successful Resolution Applicant and the Committee of Creditors (CoC), argued against the Adjudicating Authority's interference with the approved Resolution Plan. They contended that the Appellant's claims were rejected by the Resolution Professional and should not be entertained post-approval of the Resolution Plan. The Successful Resolution Applicant highlighted delays in the Appellant's filing and cited precedents to support the rejection of post-approval challenges.

Ultimately, the Tribunal declined to entertain the appeal, deeming it premature as the Adjudicating Authority had not decided on the Appellant's pending application. The Tribunal emphasized the need for the Appellant's claims to be adjudicated before challenging the Resolution Plan's approval. The judgment concluded by granting the Appellant the liberty to raise admissible issues post the decision on the pending application, I.A. No. 929 of 2021.

In summary, the judgment highlights the complexities surrounding third-party challenges to approved Resolution Plans, the importance of adjudicating pending applications before raising appeals, and the necessity for a thorough examination of contractual rights and obligations in insolvency proceedings.