2022 (12) TMI 825 - Tri - Insolvency and Bankruptcy

Approval of the Resolution Plan - Section 30(6) read with Section 31 of Insolvency Bankruptcy Code, 2016 (IBC, 2016) - HELD THAT - It appears that it is undiputed fact that the copy of resolution plan has not been provided to the suspended management. Further the law has been well settled by the Hon'ble Supreme Court in the case of Vijay Kumar Jain Vs. Standard Chartered Bank Ors. 2019 (2) TMI 97 - SUPREME COURT , it was held that a combined reading of the Code as well as the Regulations leads to the conclusion that members of the erstwhile Board of Directors, being vitally interested in resolution plans that may be discussed at meetings of the committee of creditors, must be given a copy of such plans as part of documents that have to be furnished along with the notice of such meetings. The suspended management must be provided with the copy of the resolution plan. However, the resolution professional can take an undertaking from members of the erstwhile Board of Directors to maintain confidentiality. In the present case, the reply of resolution professional to the objection of the suspended management, states about the 4th CoC meeting, wherein the procedure to obtain the data was informed. The resolution professional are directed to provide the resolution plans to the suspended management and then convene a meeting of the CoC and the CoC will deliberate on the resolution plans afresh and either reject them or approve them with the requisite majority, after which, the further procedure detailed in the Code and the Regulations will be followed. Application disposed off.

Summary

Issues:
1. Approval of the Resolution Plan under IBC, 2016
2. Objection by the suspended management regarding non-provision of resolution plan
3. Legal obligation to provide resolution plan to all participants, including the suspended management

Analysis:
1. The application under Section 30(6) of the Insolvency & Bankruptcy Code, 2016 sought approval of the Resolution Plan submitted by Agarwal Real City Private Limited for the corporate debtor, Rajpal Abhikaran Private Limited. The Resolution Professional, Ms. Teena Saraswat Pandey, filed the application before the Tribunal.

2. The suspended management raised objections, citing non-receipt of the resolution plan during the Committee of Creditors (CoC) meetings. They argued that this omission violated the provisions of the Code, referring to a judgment by the Supreme Court in a similar matter.

3. The Tribunal acknowledged the legal requirement for providing all participants, including the suspended management, with copies of the resolution plan. Citing the Supreme Court's judgment, it emphasized the importance of ensuring that all relevant documents, including resolution plans, are shared with participants to enable informed discussions and decision-making.

4. The Resolution Professional responded to the objections, highlighting discussions in the CoC meetings regarding access to company data but failed to address the specific provision of the resolution plan to the suspended management.

5. In line with the legal principles outlined by the Supreme Court, the Tribunal directed the Resolution Professional to provide the resolution plans to the suspended management. It mandated a fresh CoC meeting to reconsider the plans, allowing the suspended management to participate in the decision-making process.

6. The Tribunal emphasized the need for confidentiality undertakings from the suspended management to maintain the sensitive nature of the information shared. It instructed the Resolution Professional and the CoC to address any other objections raised by the suspended management during the reconsideration process.

7. To ensure compliance and fairness, the Tribunal excluded the time spent on these proceedings from the resolution process timeline, following the precedent set in a previous judgment. It set a deadline of two weeks for the resolution plans to be provided to the suspended management and for the CoC to reconvene to make a fresh decision.

8. The Tribunal scheduled a follow-up hearing for the Resolution Professional to submit the minutes of the CoC meeting after providing the resolution plans to the suspended management, signaling a proactive approach to monitor and enforce compliance with the directives issued.