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2023 (2) TMI 486 - AT - Insolvency and BankruptcyLiquidation of the Corporate Debtor namely Ajanta Offset packaging Limited - approval plan quashed - Adjudicating Authority in the impugned order has held that Appellants were not eligible to submit the Resolution Plan under Section 29A read with Section 240A since the date when application for submitting EOI was issued, the Appellants were not eligible - HELD THAT - From the facts specified, it is clear that Form G was issued by the Resolution Professional on 19.08.2020 in pursuance of which two Resolution Applicants filed the Resolution Plan which were considered but were not approved by the CoC and Resolution was also passed by the CoC on 05.06.2021 for liquidation and an application was filed for liquidation by the Resolution Professional on 02.07.2021, on which application notices were issued and it was only at that stage when Appellants have filed I.A. No. 4388/2021 seeking direction to permit the Appellants Suspended Directors to submit Resolution Plan for revival of the Corporate Debtor. From the order passed by the Adjudicating Authority, it is clear that the Adjudicating Authority also extended the CIRP period and directed the Resolution Professional to call a lenders meeting for taking appropriate decision and deliberate on whether more Resolution Applicants can be invited. After the order of the Adjudicating Authority dated 28.09.2021, meeting of CoC took place on 20.10.2021, where it was decided to consider the Resolution Plan submitted by the Appellants. However, CoC did not decide to issue any fresh Form G and invite any other Resolution Applicants, which act of the CoC has been adversely commented by the Adjudicating Authority - the Adjudicating Authority vide order dated 28.09.2021 gave opportunity to the Resolution Professional and the CoC to take steps to revive the Corporate Debtor. The Adjudicating Authority is right in its observation that the CoC ought to have taken steps in accordance with provisions of CIRP Regulations. The decision of the Adjudicating Authority not approving the resolution of the CoC dated 30.12.2021 approving the Resolution Plan cannot be faulted. The order of the Adjudicating Authority insofar as it disapproves the CoC decision dated 30.12.2021 is affirmed and application seeking approval of the Resolution Plan rejected. Appeal disposed off.
Issues Involved:
1. Eligibility of Appellants to submit the Resolution Plan. 2. Compliance with the Code and CIRP Regulations. 3. Consideration of other Resolution Applicants. 4. Adjudicating Authority's order and its implications. 5. Revival of Corporate Debtor vs. Liquidation. Detailed Analysis: 1. Eligibility of Appellants to Submit the Resolution Plan: The Adjudicating Authority held that the Appellants were not eligible to submit the Resolution Plan under Section 29A read with Section 240A of the Code, as they were not eligible when the application for submitting EOI was issued. It was observed that the registration of the Corporate Debtor as an MSME could not operate retrospectively to make them eligible. 2. Compliance with the Code and CIRP Regulations: The Adjudicating Authority found that the Resolution Plan submitted by the Appellants was not in compliance with the Code and CIRP Regulations. Specifically, the CoC did not invite other Resolution Applicants, which was necessary to ensure a level playing field. The CoC's decision to consider only the Appellants' plan without issuing a fresh Form G was seen as a breach of the procedural requirements. 3. Consideration of Other Resolution Applicants: The Adjudicating Authority's order dated 28.09.2021 directed the Resolution Professional to call a lenders meeting and deliberate on whether more Resolution Applicants could be invited. However, the CoC did not follow this directive and did not issue a fresh Form G to invite other Resolution Applicants. This failure was criticized by the Adjudicating Authority, which emphasized that the CoC should have taken steps in accordance with the CIRP Regulations. 4. Adjudicating Authority's Order and Its Implications: The Adjudicating Authority's order dated 28.09.2021 extended the CIRP period and directed the consideration of the Appellants' Resolution Plan. However, it also required the CoC to consider other Resolution Applicants. The CoC's failure to do so led the Adjudicating Authority to reject the approval of the Resolution Plan and order liquidation. The Tribunal upheld this decision, affirming that the CoC's actions were not in line with the procedural requirements. 5. Revival of Corporate Debtor vs. Liquidation: The Tribunal recognized the importance of making efforts to revive the Corporate Debtor before resorting to liquidation. It provided a time-bound opportunity for the Resolution Professional to issue a fresh Form G and consider willing Resolution Applicants, including the Appellants. The liquidation order was kept in abeyance to allow for this effort. If a Resolution Plan is approved within 90 days, the liquidation order will become inoperative; otherwise, the Corporate Debtor will be put into liquidation. Conclusion: The Tribunal upheld the Adjudicating Authority's decision to reject the approval of the Resolution Plan due to non-compliance with the Code and CIRP Regulations. It emphasized the need to consider other Resolution Applicants and provided a final opportunity to revive the Corporate Debtor. The liquidation order was kept in abeyance to allow for this effort, with a clear timeline and conditions for the process.
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