2021 (7) TMI 556 - Tri - Insolvency and Bankruptcy

Secured Financial Creditor or not - seeking to put Resolution Plan again in terms of the change in status of the Applicant as a Secured Financial Creditor - HELD THAT - Considering the fact that the loan was disbursed to the corporate debtor by the applicant but the said is not supported with any documentary evidence to show the creation of security interest as mentioned in IBBI (Liquidation Process) Regulations, 2016. Hence, the arguments that the present applicant needs to be classified as secured creditor cannot be accepted - The RP has rightly considered the absence of any proof of security document and then declared the applicant as unsecured financial creditor, at par with financial creditors in class of creditors being home buyers. In absence of any registration of charge in the ROC record of the corporate debtor, the present applicant needs to be recognized as unsecured financial creditor. Moreover, the resolution plan is approved by CoC and the resolution applicant cannot be put to hardship of facing new claim/new category of a claim. The present application fails and is rejected.

Summary

Issues:
Application under section 60(5) of the Insolvency and Bankruptcy Code, 2016 for directions against the Resolution Professional regarding classification as a Secured Financial Creditor.

Analysis:
1. The Applicant filed an application seeking directions against the Resolution Professional of a company under Corporate Insolvency Resolution Process. The Applicant claimed to be a Secured Financial Creditor and requested reclassification in the Resolution Plan.
2. The Applicant alleged that despite providing security in the form of units of flats against loans disbursed to the Corporate Debtor, the Resolution Professional classified the Applicant as an unsecured financial creditor during the CoC Meeting.
3. The Applicant submitted that the IRP/RP failed to seek clarification regarding the security interest, as required by the regulations. The RP's classification of the Applicant as unsecured was deemed illegal and contrary to the provisions of the I & B Code, 2016.
4. The RP contended that the Applicant's security claim was not admitted due to lack of proof of security interest as per the IBBI regulations. The RP also argued that the properties proposed as security were non-existent, and the charge was never registered, leading to the classification as an unsecured creditor.
5. The RP relied on judgments emphasizing that once a Resolution Plan is approved by the CoC, new claims cannot be entertained to avoid uncertainty for the Resolution Applicant taking over the Corporate Debtor's business.
6. The Tribunal found in favor of the RP, stating that without documentary evidence of security interest and absence of charge registration, the Applicant cannot be classified as a secured creditor. The decision aligned with the principles of the I & B Code and previous judicial precedents.
7. The application was rejected, and the order communicated to the parties and forwarded to the IBBI for records, concluding the matter in favor of the Resolution Professional's classification of the Applicant as an unsecured financial creditor.

This detailed analysis covers the contentions, arguments, and reasoning presented by both parties, along with the Tribunal's decision based on legal provisions and precedents cited during the proceedings.