Resolution Plan Under IBC Approved: Debts and Legal Liabilities Extinguished, Government Tax Claims Dismissed.

The NCLT Hyderabad approved a Resolution Plan under the IBC, 2016, for a financially distressed company, extinguishing all debts and legal liabilities prior to the approval date, including claims from Governmental Authorities for taxes. The approval rendered an existing appeal moot, leading to its dismissal. The Resolution Plan was found compliant with IBC provisions and binding on the Corporate Debtor, employees, creditors, and governmental bodies, effectively resolving the dispute and extinguishing all prior claims.

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Issues:
The judgment involves issues related to insolvency and bankruptcy proceedings under the Insolvency and Bankruptcy Code (IBC), 2016, specifically focusing on the approval and effects of a Resolution Plan.

Summary:
The company faced financial difficulties leading to a financial creditor filing an application under Sec 7 of IBC for debt recovery. NCLT Hyderabad initiated Corporate Insolvency Resolution Process (CIRP) under Sec 13 of IBC. A Resolution Plan was approved on 29.06.2019, extinguishing all debts and legal liabilities prior to the approval date. The Resolution Plan stated that all claims of Governmental Authorities for taxes would be extinguished. An appeal filed in 2012, existing before the approval date, was settled under the Resolution Plan. NCLT approved the Resolution Plan, making it binding on all stakeholders. The Tribunal dismissed the appeal as the Resolution Plan had been approved, rendering the appeal moot.

The NCLT approved the Resolution Plan, finding it compliant with IBC provisions and not in contravention of Sec 29A. The Plan was deemed binding on the Corporate Debtor, employees, creditors, Central Government, State Government, and other stakeholders involved. The NCLT's approval of the Resolution Plan led to the dismissal of the appeal, as the Plan had extinguished all debts and legal liabilities, resolving the underlying dispute.

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