2023 (12) TMI 50 - AT - Insolvency and Bankruptcy

Sanction of scheme of compromise of the Corporate Debtor under Section 230 of the Companies Act, 2013 read with Regulation 2B of IBBI (Liquidation Process) Regulations, 2016 - HELD THAT - It is submitted that the proposed scheme of the appellant may be put to the SCC on 01.12.2023 which shall be considered by the SCC on that day and take the decision accordingly. Counsel for the Appellant has not shown any averseness to this proposal made by the Counsel for the Respondent. As a result, thereof, while disposing of this appeal, it is directed as per the agreement between the parties, that the scheme propounded by the appellant, in terms of the Section 230 of the act, shall be presented before the SCC on 01.12.2023. the meeting shall be convened by the liquidator on 01.12.2023 by giving time, date and place to the parties concerned and in that meeting the scheme shall be considered by the SCC a decision shall be taken in accordance with law. The present appeal is hereby disposed of.

Summary

Issues Involved:
- Appeal against rejection of compromise scheme by liquidator under Section 230 of the Companies Act, 2013 and Regulation 2B of IBBI (Liquidation Process) Regulations, 2016.

The appellant submitted a compromise scheme to the liquidator for debt restructuring of the corporate debtor, which was rejected by the Stakeholders Consultation Committee (SCC) due to a significant difference in value compared to the reserve price set for the auction of the Corporate Debtor. The appellant alleged that the liquidator violated Section 230 (1) by not presenting the scheme before the SCC, hindering the appellant's ability to persuade the SCC regarding the submitted scheme. The appellant relied on a previous NCLAT decision in support of their argument.

The Respondent's counsel highlighted the details of the SCC meeting where the compromise proposals were discussed and rejected based on various factors, including non-compliance with regulations and lack of necessary supporting documents. The majority of SCC members accepted fixing the reserve price at Rs. 155 Crores, leading to the rejection of the proposals.

In the impugned order, the Respondent's counsel distinguished a previous case based on the value of the proposed compromise scheme and reserve price set by the SCC. The deficiency in securing consent from secured creditors as required by law rendered the appellant's scheme non-viable. The Tribunal considered both sides' arguments and concluded that the appellant's request for an ad-interim stay on the E-Auction was unwarranted, as the SCC had already rejected the proposed compromise scheme in a previous meeting.

The Tribunal directed that the proposed scheme be presented before the SCC on a specified date for reconsideration and decision-making in accordance with the law. The order passed by the Tribunal was not to impede the scheduled auction of the Corporate Debtor.

Overall, the appeal was disposed of with the direction to present the scheme before the SCC for further consideration, ensuring a fair process in line with legal requirements.