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2022 (11) TMI 951 - AT - Insolvency and BankruptcySeeking withdrawal of application u/s 12A of IBC - Commercial wisdom of COC - HELD THAT - The 06th, 07th and 08th CoC Meetings which have been brought on record in the Contempt Application clearly indicate the substantial part of discussions in the minutes of the CoC where with regard to the interpretation of the Order of this Tribunal dated 04.07.2022, there was divergence in the views of the Resolution Professional and the CoC with regard to the interpretation of the Order dated 04.07.2022 - The proposal of Applicant under section 12A for Settlement has naturally to be weighed against the Resolution Plans received in the process unless the Resolution Plans are opened and deliberated side by side with the proposal of settlement submitted by the Appellant, the objective as contemplated in paragraph 14(iii) cannot be achieved - the Order dated 04.07.2022 clearly entitled that the CoC to weigh the Resolution Plans as well as Settlement Proposal together. It is well settled that it is the commercial decision of the CoC which is paramount in the CIRP. The Appellant who is suspended Director of the Corporate Debtor who has already submitted Settlement Proposal was permitted to participate in the meeting of the CoC which is apparent from the minutes of the CoC brought on record - Appellant who was representing the Corporate Debtor and has submitted the Settlement Proposal is entitled to participate in deliberation and negotiation undertaken by the CoC. CoC can very well ask the Resolution Applicants to revise their plans similarly the Appellant can always be asked to revise his proposal to match the Resolution Applicants Offer. It goes without saying that ultimate decision is of the CoC. Application disposed off.
Issues Involved:
1. Challenge to the Order admitting the Application under Section 7 of IBC. 2. Interpretation and implementation of the Tribunal's directions regarding Section 12A Settlement Proposal. 3. Alleged contempt of the Tribunal's Order dated 04.07.2022. Detailed Analysis: 1. Challenge to the Order admitting the Application under Section 7 of IBC: The Appellant, a Suspended Director of the Corporate Debtor, filed Company Appeal (AT) Ins. No. 03 of 2022 challenging the Order dated 24.12.2021, which admitted the Application under Section 7 of the Insolvency and Bankruptcy Code (IBC) filed by the Respondent- Indian Bank. The Tribunal had previously disposed of this Appeal by Judgment dated 04.07.2022, providing the Appellant an opportunity to submit a fresh Application under Section 12A of the IBC. 2. Interpretation and implementation of the Tribunal's directions regarding Section 12A Settlement Proposal: The Tribunal's Judgment dated 04.07.2022 allowed the Appellant to submit a fresh Application under Section 12A of the IBC with an offer exceeding Rs. 81 Crores. The Committee of Creditors (CoC) was directed to consider this Application while keeping in mind factors such as the potential realization amount from the Corporate Debtor's assets, maximization of assets, and recovery of financial dues. After the Tribunal's Order, the Appellant submitted a Settlement Proposal under Section 12A, which included three options. During the CoC meetings, there was a divergence in views regarding the interpretation of the Tribunal's Order, particularly whether the Resolution Plans should be disclosed and compared with the Settlement Proposal. The CoC eventually rejected the Settlement Proposal, citing the need for a comparative analysis of the Resolution Plans and the Settlement Proposal. The Tribunal clarified that the CoC must weigh both the Resolution Plans and the Settlement Proposal together to achieve the objective of maximizing the value of the Corporate Debtor's assets. The Appellant, as a suspended Director, was entitled to participate in the CoC's deliberations and negotiations. The CoC could ask both the Resolution Applicants and the Appellant to revise their offers to optimize the maximum value. 3. Alleged contempt of the Tribunal's Order dated 04.07.2022: The Appellant filed a Contempt Application, alleging that the CoC and the Resolution Professional did not comply with the Tribunal's directions. The Tribunal found no violation of its Order dated 04.07.2022. The minutes of the CoC meetings indicated a difference of opinion regarding the Order's interpretation, which did not amount to contempt. The Tribunal concluded that there was no ground to initiate contempt proceedings against the CoC. Conclusion: The Tribunal disposed of I.A. No. 3410 of 2022, directing the CoC to deliberate on both the Resolution Plans and the Settlement Proposal under Section 12A and take a final decision. The CIRP period was extended by 15 days beyond 28th November 2022. The Contempt Application (AT) No. 25 of 2022 was dismissed, as no contempt was found.
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