2020 (9) TMI 1244 - Tri - Insolvency and Bankruptcy

Tribunal orders maintain status quo in fund distribution amid challenge over admitted claims

The Tribunal allowed the urgent hearing of the application challenging the Liquidator's decision to admit certain claims in a liquidation proceeding. It ... Liquidation process - validity of admission of claims of respondent Nos. 2 to 5 - HELD THAT:- Issue notice to the respondents and the applicant counsel shall collect the same from the Registry and send along with copy of the application and the entire paper book to the respondents by Speed Post immediately as well as at the e-mail address available and file affidavit of service along with postal receipt, tracking report and copy of e-mail within 10 days. Issue notice to the respondents and the applicant counsel shall collect the same from the Registry and send along with copy of the application and the entire paper book to the respondents by Speed Post immediately as well as at the e-mail address available and file affidavit of service along with postal receipt, tracking report and copy of e-mail within 10 days. Issues: Urgent hearing of IA No.368/2020, Admittance of claims by Liquidator, Maintenance of status quo in fund distributionThe Tribunal allowed IA No.367/2020 seeking an urgent hearing of IA No.368/2020, which was filed by the Suspended Managing Director of a company undergoing liquidation proceedings against the Liquidator and certain other claimants. The IA was filed under Section 60(5) of the Code read with Section 42 of the Insolvency and Bankruptcy Code, 2016, challenging the decision of the Liquidator in admitting the claims of respondent Nos.2 to 5. The Tribunal heard the Senior Counsel for the applicant and issued notices to the respondents, instructing the applicant's counsel to serve the notices to the respondents by Speed Post and e-mail within 10 days. Respondents were given two weeks to file reply/objections and an additional week for rejoinder. The matter was listed for further hearing on 21.10.2020.The Tribunal directed the respondent No.1 Liquidator to maintain status quo regarding the distribution of funds to respondent Nos.2 to 5 until further orders. This measure ensures that the funds are not distributed pending the resolution of the issues raised in IA No.368/2020. By maintaining status quo, the Tribunal aims to prevent any irreversible consequences that may arise from the distribution of funds before a final decision is made on the claims admitted by the Liquidator. This directive serves to protect the interests of all parties involved in the liquidation proceedings and ensures a fair and orderly resolution of the dispute regarding the admitted claims.