CoC Upheld in Validating Resolution Plans; Procedural Compliance Confirmed

The CoC's decision to not shortlist SSG Group's Resolution Plan was upheld as lawful and based on the evaluation matrix, deeming SSG's subsequent plan irrelevant. CarVal's Resolution Plan was approved despite Noble's procedural violation allegations, with the CoC's majority vote deemed valid and transparent. Procedural lapses were noted, but the CoC's actions were found compliant with the law. Allegations of favoritism by SBI towards CarVal were divided, with the majority concluding SBI's actions aligned with the CoC's decision-making process. Ultimately, the CoC's decisions were upheld as lawful and in accordance with the evaluation matrix.

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Issues Involved:
1. Non-shortlisting of SSG Group's Resolution Plan.
2. Approval of CarVal's Resolution Plan.
3. Allegation of procedural violations by the Resolution Professional (RP) and Committee of Creditors (CoC).
4. Favoritism by State Bank of India (SBI) towards CarVal's Resolution Plan.

Detailed Analysis:

Issue 1: Non-shortlisting of SSG Group's Resolution Plan

The SSG Group challenged the decision of the Resolution Professional (RP) for not shortlisting its Resolution Plan despite compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016. The Judicial Member found that the email dated 29.03.2019 from the RP to SSG Group did not disclose reasons for non-shortlisting, deeming the decision legally flawed. The Judicial Member criticized the CoC for not suggesting improvements to SSG's Initial Resolution Plan and expressed doubts about the Delph and Phelps Report's veracity.

Conversely, the Technical Member noted that in the 12th CoC meeting on 26.03.2019, both SSG and CarVal were asked to submit final commercial offers. Based on the updated Evaluation Report on 29.03.2019, CarVal's plan was shortlisted as superior. The CoC's decision was strictly in accordance with the evaluation matrix, and the intimation to SSG was considered sufficient.

The third member agreed with the Technical Member, stating that the CoC's decision was lawful and based on the evaluation matrix. The SSG Group's subsequent plan, though superior, could not be considered as the process was already concluded.

Issue 2: Approval of CarVal's Resolution Plan

Noble Resources International Pte Limited (Noble), an Operational Creditor, contested the approval of CarVal's Resolution Plan, alleging procedural violations. The Judicial Member held that Noble's right to attend CoC meetings was essential for fairness and transparency. Since the CoC provided the resolution copy to Noble one day after the plan's approval, the process was deemed null and void. The Judicial Member also noted favoritism by SBI towards CarVal.

The Technical Member countered that Noble was provided with the Resolution Plan before the 15th CoC meeting on 19.04.2019. The grievance was about not receiving the Delph and Phelps report certified on 16.04.2019. The Technical Member found the physical voting valid as all CoC members were present, and no favoritism by SBI was established.

The third member concurred with the Technical Member, emphasizing that the CoC's decision-making process was transparent and lawful. The CoC's approval of CarVal's plan with a majority vote was valid, and Noble's objections were unfounded.

Issue 3: Allegation of Procedural Violations

The Judicial Member highlighted procedural lapses, including the lack of reasons for non-shortlisting SSG's plan and the rushed evaluation report. The Technical Member clarified that the CoC followed due process, including multiple opportunities for SSG to revise its plan. The CoC's decision was based on the evaluation matrix, and no voting was required for shortlisting.

The third member affirmed that procedural infractions, if any, did not affect the substantial rights of the parties. The CoC's actions were in compliance with the Code and the evaluation matrix.

Issue 4: Favoritism by SBI

Noble alleged that SBI showed favoritism towards CarVal by leading the approval process. The Judicial Member supported this view, while the Technical Member found no evidence of favoritism. The CoC's decision was based on the evaluation matrix, and SBI's lead role was typical in such scenarios.

The third member agreed with the Technical Member, noting that SBI's actions were aligned with the CoC's majority decision. The approval process was transparent and lawful.

Conclusion

The third member agreed with the Technical Member's findings, stating that the CoC's decisions were in accordance with the law and based on the evaluation matrix. The objections raised by SSG and Noble were unsustainable. The CoC's approval of CarVal's Resolution Plan was valid, and any procedural infractions did not affect the substantial rights of the parties.

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