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2022 (6) TMI 618 - Tri - Insolvency and BankruptcySeeking Liquidation of Corporate Debtor - violation of the Resolution Plan - HELD THAT - On perusal of the record, it is seen that the successful Resolution Applicant has implemented half of the plan and according to the Respondents, payments have been made to the other creditors - the Respondents have given One Time Settlement offers to the Applicant, but the Applicant has refused to accept the same and has also refunded the amount given as guarantee. The conduct of the successful Resolution Applicant does reflect poorly on the successful Resolution Applicant and whether the successful Resolution Applicant should be given an opportunity to make the payments as resolved under the Resolution Plan is a very doubtful question. In the interest of the integrity of the process of resolution with an ultimate aim to allow the enterprise once again to stand on its feet, all the stakeholders should strive towards reviving the Corporate Debtor and avoid the liquidation to the extent possible.Hence, the successful Resolution Applicant is directed to pay the balance amount to the Applicant, as agreed in the Resolution Plan within two months from the date of this order, failing which an appropriate course of action shall be followed keeping the tenets of the code in right earnest - application allowed.
Issues:
- Implementation of Resolution Plan - Breach of terms of the approved Resolution Plan - Failure to make payments to the Applicant - Dispute over payments specified in the Resolution Plan - Impact of Covid-19 pandemic on property valuations - One-Time Settlement offer and its rejection - Legal provisions for liquidation under the Insolvency and Bankruptcy Code - Revival of the Corporate Debtor Implementation of Resolution Plan: The Tribunal heard the case involving the implementation of a Resolution Plan under the Insolvency and Bankruptcy Code. The Applicant, a bank, filed an application stating that the Respondent, the successful Resolution Applicant, had failed to make payments as per the approved plan. The Respondent had made partial payments to other creditors, leading to a dispute over compliance with the Resolution Plan. Breach of Terms of the Approved Resolution Plan: The Applicant contended that the Respondent had breached the terms of the approved Resolution Plan by failing to make payments as agreed. Despite multiple requests for implementation, the Resolution Applicant did not fulfill its obligations, causing financial harm to the Applicant. Impact of Covid-19 Pandemic on Property Valuations: Due to the Covid-19 pandemic and subsequent lockdown, property valuations dropped significantly, affecting the feasibility of the Resolution Plan. The prices of properties listed in the plan decreased, making it challenging to find buyers at the specified prices. One-Time Settlement Offer and its Rejection: The Respondent made a One-Time Settlement offer to the Bank, which was rejected. The Tribunal examined the legality of such offers, emphasizing that entering into a One-Time Settlement might amount to modifying the approved Resolution Plan, which could be impermissible under the law. Legal Provisions for Liquidation under the Insolvency and Bankruptcy Code: The Tribunal considered legal precedents and provisions under the Insolvency and Bankruptcy Code regarding the possibility of liquidation. The Code mandates that if certain conditions are met, the Adjudicating Authority must pass an order for liquidation, as highlighted in relevant judgments. Revival of the Corporate Debtor: In the interest of the Code's objective to revive the Corporate Debtor and avoid liquidation, the Tribunal directed the successful Resolution Applicant to pay the balance amount to the Applicant within a specified timeframe. Emphasizing the importance of the resolution process, the Tribunal aimed to facilitate the revival of the enterprise and instructed all stakeholders to work towards this goal. This detailed analysis of the judgment highlights the key issues, legal arguments, and the Tribunal's decision regarding the implementation of the Resolution Plan and the potential liquidation of the Corporate Debtor.
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