2023 (11) TMI 264 - AT - Insolvency and Bankruptcy

CIRP proceedings - right to proceed against the subsidiary company as well even if the holding company is in CIRP - HELD THAT - In the light of the judgments of the Hon ble Supreme Court in the matter of Jaypee Kensington Boulevard Apartments Welfare Association Ors. ( 2021 (3) TMI 1143 - SUPREME COURT ) and this Tribunal in Alok Industries (supra), we are of the clear view that now there is no bar to hear the section 7 application filed by Yes Bank, which is now being pursued by its assignee J.C. Flowers Asset Reconstruction Pvt. Ltd., which can be considered and adjudicated upon. The present appeal has been filed by the Appellant being aggrieved that his application has kept in abeyance by recording reasons which are not germane to the issue involved but once the proceedings has again been started, it is deemed appropriate to dispose of this appeal with the observation that the finding recorded in the impugned order shall not come in way either of the parties for the purpose of decision of Section 7 application and all the issues shall remain open.

Summary

Issues involved:
The judgment deals with the issues related to the initiation of Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor, the interplay between the CIRP of a holding company and its subsidiary, and the implications of approval of resolution plans on the moratorium.

Initiation of CIRP against Corporate Debtor:
The appeal arose from an order seeking to initiate CIRP against a Corporate Debtor for the resolution of a specific amount, which was ordered to be kept in abeyance by the Adjudicating Authority.

Interplay between Holding Company and Subsidiary in CIRP:
The judgment discussed the scenario where a holding company had 100% shares in a subsidiary, and separate CIRP proceedings were initiated against both entities. It highlighted the approval of a resolution plan for the holding company and the need for separate consideration of resolution plans for subsidiary companies.

Implications of Approval of Resolution Plans on Moratorium:
The judgment addressed the lifting of moratorium upon approval of a resolution plan, emphasizing the right to proceed against a subsidiary company even if the holding company is undergoing CIRP. Legal precedents were cited to support the argument that CIRP of a subsidiary can proceed independently of the holding company's CIRP.

Separate Judgment:
A separate judgment was delivered by the Hon'ble Supreme Court regarding the acceptance of proposals by stakeholders and the focus of resolution plans on the assets of the Corporate Debtor. The judgment clarified the rights of lenders and the relevance of specific conditions in resolution plans.

Conclusion:
The Tribunal concluded that there was no bar to hear the Section 7 application filed by the Appellant, as the proceedings had restarted. The appeal was disposed of with the observation that the findings recorded in the impugned order would not hinder the decision on the Section 7 application, ensuring that all issues remained open for further adjudication.