2018 (3) TMI 1768 - AT - Insolvency and Bankruptcy

Resolution plan approved with modifications for Debtor Company appeal. Liberty to withdraw plan if dissatisfied.

The Adjudicating Authority approved the resolution plan with modifications submitted by the appellant, a Resolution Applicant, for the Debtor Company. The ... Jurisdiction - modification of ‘resolution plan’ once approved by the Committee of Creditors - HELD THAT:- Learned counsel for the appellant submits that the Adjudicating Authority has no jurisdiction to modify the ‘resolution plan’ once approved by the Committee of Creditors. However, if such submission is accepted in that case then only recourse will be available to the Adjudicating Authority is to reject the resolution plan, being not satisfied with the resolution plan. The appellant submits that the appellant does not want liquidation of the corporate debtor. In this regard, while we are not expressing any opinion, give liberty to the appellant to withdraw the resolution plan, if it is not satisfied with the amendment made therein. In such case the Adjudicating Authority will allow the same and proceed with the liquidation. The appeal is disposed of with the aforesaid liberty. Issues:1. Appeal against order approving resolution plan with modifications2. Jurisdiction of Adjudicating Authority to modify resolution plan3. Liberty to withdraw resolution plan to avoid liquidationAnalysis:1. The appellant filed an appeal against the order passed by the Adjudicating Authority approving the resolution plan with modifications. The Resolution Plan submitted by the appellant, a Resolution Applicant, was considered by the Adjudicating Authority. The plan involved the infusion of fresh funds by the existing Promoters, aiming to address the interests of all stakeholders, including Financial Creditors and Operational Creditors. The Adjudicating Authority noted certain inconsistencies in the plan regarding the Promoters' contributions and proposed modifications to ensure the financial stability of the Debtor Company. The Resolution Plan was ultimately approved with the suggested modifications, binding on the Corporate Debtor and other stakeholders, leading to the revival of the Debtor Company and the cessation of the moratorium under section 14.2. During the proceedings, the appellant raised a jurisdictional issue, arguing that the Adjudicating Authority lacked the power to modify the resolution plan once approved by the Committee of Creditors. The appellant contended that if such modifications were allowed, the only recourse available to the Adjudicating Authority should be to reject the plan if unsatisfied. However, the Tribunal expressed a prima facie view that the modifications made by the Adjudicating Authority were not illegal. The appellant was granted the liberty to decide whether to press the appeal or withdraw the resolution plan if dissatisfied with the amendments. In case of withdrawal, the Adjudicating Authority would proceed with liquidation, as per the appellant's preference.3. The appellant, through learned counsel, emphasized the desire to avoid liquidation of the corporate debtor. While the Tribunal did not express any opinion on this matter, it granted the appellant the liberty to withdraw the resolution plan if not content with the modifications. In such an event, the Adjudicating Authority would permit the withdrawal and proceed with liquidation. The appeal was disposed of with the aforementioned liberty granted to the appellant, and no costs were imposed in this regard.