The NCLAT held that the requirement of obtaining a No Objection ...

NCLAT Rules No Objection Certificate Unnecessary for Revival Schemes Under IBC, Streamlining Insolvency Processes.

August 22, 2024

Case Laws     Companies Law     AT

The NCLAT held that the requirement of obtaining a No Objection Certificate (NOC) from stock exchanges under Regulation 37(1) and (2) of the LODR (Listing Obligations and Disclosure Requirements) is not applicable for schemes of arrangement for revival of companies undergoing liquidation under the Insolvency and Bankruptcy Code (IBC). SEBI's exemption for resolution plans u/s 31 of the IBC from seeking NOC from stock exchanges was intended to facilitate time-bound CIRP process under the Code's supervision. The scheme for revival, akin to a resolution plan, complies with Section 30(2) of the IBC and Regulations 37 and 38 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, including payment of CIRP and liquidation costs, workmen's dues, settlement value to creditors, extinguishment of liabilities, ouster of erstwhile promoters, and induction of acquirers as new promoters. Courts emphasize reviving the company's business in stakeholders' interest. The scheme offers a higher value than rejected resolution plans and liquidation value. Stock exchanges have the opportunity to raise objections before the NCLT during scheme approval.

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