Tribunal Orders Review of Decision Excluding EXIM Bank from Creditors' Committee The Tribunal found the Resolution Professional's decision to exclude the EXIM Bank from the Committee of Creditors and not recognize it as a financial ...
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Tribunal Orders Review of Decision Excluding EXIM Bank from Creditors' Committee
The Tribunal found the Resolution Professional's decision to exclude the EXIM Bank from the Committee of Creditors and not recognize it as a financial creditor legally unsustainable. Emphasizing the importance of active consultation and collective decision-making within the COC, the Tribunal directed a review of the decision, stressing the need for a collective decision-making process involving all COC members. A meeting was scheduled for early November for reconsideration, allowing the EXIM Bank to present its stance and other financial creditors to express independent views if necessary. The RP's order excluding the EXIM Bank was suspended pending further proceedings.
Issues: 1. Exclusion of EXIM Bank from the Committee of Creditors (COC) and its status as a financial creditor. 2. Legality and validity of the decision taken by the Resolution Professional (RP) without active consultation with other COC members. 3. Procedure and practice adopted by the RP in conducting COC meetings.
Analysis: 1. The Tribunal observed that the decision of the RP to exclude the EXIM Bank from the COC and not treat it as a financial creditor is prima facie not legally sustainable. The RP is expected to interact effectively with COC members to collectively work on a resolution plan in the best interest of the company under resolution. The Tribunal emphasized the importance of active consultation and collective decision-making within the COC.
2. The Tribunal found that the RP's decision seemed to be based on legal opinions without active involvement of other COC members. The decision was communicated to the EXIM Bank before the COC meeting, indicating a lack of formal consultation. The Tribunal highlighted the need for collective responsibility of the RP and COC in reaching reasonable conclusions to protect the company's interests. It directed the COC to reconsider the legal opinion and make a collective decision, emphasizing the essence of time under the Insolvency and Bankruptcy Code.
3. The Tribunal directed the RP and COC to convene a meeting in the first week of November to review the legal opinion and make a conscious decision regarding the status of the EXIM Bank. It allowed the EXIM Bank to present its stance before the COC, with the RP's views also considered in the decision-making process. In case of serious differences among COC members, other financial creditors were permitted to express independent views for the Court's consideration. The Tribunal kept the RP's order excluding the EXIM Bank from the COC in abeyance until the next hearing scheduled for compliance reporting on 10th November 2017.
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