DOES RESOLUTION PLAN NEED TO MATCH THE LIQUIDATION VALUE? -EASYLEGALTAX
Justice Anirudh Bose speaking through two-judges bench in the case of Maharashtra Seamless Ltd (MSL) v. Padmanabhan Venkatesh and others. The SC was called upon to decide, firstly, whether the code contemplates that the sum forming part of the resolution plan should match the liquidation value or not. And secondly, whether Section 12-A is the applicable route through which a successful Resolution Applicant can retreat. The NCLAT has approved the resolution plan computing of amount of Rs.477 crores, this has given the Resolution Applicant pennies from the heaven as they would get assets valued at Rs.597.54 crores at much lower amount.
Section 14: moratorium -EASYLEGALTAX
The moratorium regarding Insolvency and Bankruptcy Code, 2016 ('IBC') implies a period wherein no legal procedures for recovery, enforcement of security interest, sale or transfer of assets, or termination of essential contracts can be established or proceeded against the Corporate Debtor. This brings up a fascinating issue on the issue of the pertinence of the Moratorium to the procedures under Section 138 of the Negotiable Instruments Act, 1891 (NI Act).
WHY NCLAT ORDERS ARE APPLEALLABLE TO SUPREME COURT ONLY? -EASYLEGALTAX
On the vide recommendation of Justice Eradi Committee on law relating to insolvency and winding up of companies, the NCLT and NCLAT was established on 1st June, 2016. The jurisdiction of NCLT and NCLAT extents to the Companies Act, 2013 and Limited Liability Partnerships under the Insolvency and Bankruptcy Code, 2016. The NCLT and NCLAT has limited subject-matter jurisdiction specifically in the matters related to the companies and their liquidation and insolvency. The establishment of the NCLT and NCLAT was also challenged in the SC but the court upheld their establishment.
NCLAT HELD THAT APPLICABILITY OF SECTION 29A OF IBC WHILE CONSIDERING SECTION 12A OF IBC
In a very recent judgment, the Hon’ble NCLAT in the matter of Shweta Vishwanath Shirke & Ors. vs. Committee of Creditors, while dismissing the Order for liquidation of M/s Sterling Biotech, passed by the Adjudicating Authority, Mumbai Bench, has held that Section 29A of IBC is not applicable for entertaining/considering an application under Section 12A of IBC. The NCLAT while deciding the Appeals observed that the application moved under Section 12A having been approved by the 'Committee of Creditors' by more than 90% of the voting share as required under the Code, it was not open to the Adjudicating Authority to reject the same and that too on the ground that the promoter, who has moved the Application under Section 12A is ineligible under Section 29A to file a Resolution Plan.
Whether the Resolution Professional has jurisdiction to determine” the claim Filed by Financial Creditor
The National Company Law Appellate Tribunal (NCLAT) in a recent judgment while upholding the Judgment passed by the NCLT, Chennai has held that the ‘Resolution Professional’ have no jurisdiction to “determine” the claim. The Resolution Professional could have only “collated” the claim, based on evidence and the record of the ‘Corporate Debtor’ or as filed by the Financial Creditor.
Prima Facie View of NCLAT: Enforcement Directorate To Be treated As Operational Creditor
The Hon’ble NCLAT while hearing the appeal filed by the successful Resolution Applicant expressed its prima facie that if the assets seized by the Enforcement Directorate are finally held that the assets were purchased out of the ‘proceeds of crime’ as per the Prevention of Money Laundering Act, in such case, the amount which is generated out of the assets will come under the definition of the ‘Operational Debt’ for which the Enforcement Directorate may file claim in terms of the I&B Code.