2025 (2) TMI 749 - AT - IBC

Approval of the Resolution Plan - Section 30(2) of the IBC - HELD THAT - The financial creditors having been given the right to proceed against the personal guarantor for the balance liability it is always open for the financial creditor to proceed against the personal guarantor/ corporate guarantor that being the approved clause of Resolution Plan Appellant cannot be heard to say anything against that. One more ground which has been taken in the appeal is that after the commencement of the insolvency proceeding against the Appellant against the personal guarantor w.e.f. 01.03.2024 Appellant has not been invited to participate in the meeting of the CoC. In the present case Appellant has not pleaded that in the CoC meeting which was held subsequent to 01.03.2024 there was no representation of the suspended director of the corporate debtor. The personal insolvency having been commenced on 01.03.2024 not allowing participation of the Appellant cannot be said in any manner affect the meeting of the CoC where it is not even pleaded that suspended management was not invited to participate. It is not the case of the Appellant that the Resolution Plan submitted by the SRA is not compliant of Section 30(2) of the IBC. The jurisdiction of the Adjudicating Authority and this Tribunal to interfere with the commercial wisdom of the CoC is too limited and the Adjudicating Authority and this Tribunal can interfere with approval of the Resolution Plan only when plan is not in compliance of Section 30(2). Conclusion - There are no grounds to interfere with the Adjudicating Authority s approval of the Resolution Plan. Approval of a Resolution Plan does not discharge a personal guarantor s liabilities. There are no ground to interfere with the impugned order. There is no merit in the appeal. The Appeal is dismissed.

Summary

The National Company Law Appellate Tribunal, Principal Bench in New Delhi considered an appeal filed by a promoter/suspended director of the corporate debtor, 'Metenere Limited,' challenging the approval of the Resolution Plan by the Adjudicating Authority. The key issues presented and analyzed in the judgment are as follows:**Issues Presented and Considered:**1. Whether the Resolution Plan, which directed payment release after the Adjudicating Authority's decision in different applications, would impact the pay-out to financial creditors and the liability of guarantors.2. Whether the Resolution Plan was conditional and should not have been approved.3. Whether the personal guarantees under the Resolution Plan were extinguished.4. Whether the appellant's exclusion from the CoC meeting post-insolvency commencement affected his rights.5. Whether the Adjudicating Authority's direction to distribute the amount based on pending applications was appropriate.**Issue-Wise Detailed Analysis:****Relevant Legal Framework and Precedents:**The Tribunal considered the Insolvency and Bankruptcy Code (IBC) provisions, particularly Section 30(2), and the Supreme Court's ruling in Lalit Kumar Jain vs. Union of India, emphasizing that approval of a Resolution Plan does not discharge a personal guarantor's liabilities.**Court's Interpretation and Reasoning:**The Tribunal noted that the Resolution Plan's approval did not discharge the personal guarantor's liabilities. The plan's provision allowing financial creditors to proceed against personal/corporate guarantees was binding on all stakeholders, including the promoter/guarantors. The Tribunal emphasized that the Adjudicating Authority's direction to deposit the entire amount in a high-interest account protected stakeholders' interests.**Key Evidence and Findings:**The Tribunal highlighted the Resolution Plan's clause stating that financial creditors could avail recourse against personal/corporate guarantees, which was approved by the CoC. The plan's terms, including the protection of stakeholders' interests, were crucial in its analysis.**Application of Law to Facts:**The Tribunal applied the legal principles established in the IBC and the Lalit Kumar Jain case to determine the validity of the Resolution Plan's provisions regarding personal guarantees and financial creditors' rights.**Treatment of Competing Arguments:**The appellant's argument that the Resolution Plan was conditional and would reduce payouts to financial creditors was countered by the CoC's submission that the plan's terms were fair and protected stakeholders' interests.**Significant Holdings:**The Tribunal dismissed the appeal, concluding that the Resolution Plan's approval did not discharge the personal guarantor's liabilities. The plan's terms, including the provision for financial creditors to proceed against guarantees, were upheld as binding on all stakeholders.**Core Principles Established:**- Approval of a Resolution Plan does not discharge a personal guarantor's liabilities.- Financial creditors can avail recourse against personal/corporate guarantees as per the approved Resolution Plan.**Final Determinations on Each Issue:**The Tribunal found no grounds to interfere with the Adjudicating Authority's approval of the Resolution Plan, emphasizing the limited scope for interference with the CoC's commercial wisdom unless the plan violates Section 30(2) of the IBC.In conclusion, the Tribunal upheld the Resolution Plan's validity, emphasizing the protection of stakeholders' interests and the continued liability of personal guarantors. The appeal was dismissed, affirming the Adjudicating Authority's decision.