Tribunal upholds Insolvency Plan, allows CoC vote changes for equal creditor treatment

The Tribunal held that the Resolution Plan, approved within the stipulated 270 days excluding certain periods, was in conformity with the Insolvency and Bankruptcy Code. It allowed the CoC to change votes to ensure plan success, treating all Financial Creditors equally. The plan's viability and feasibility were affirmed, with a modified payment period of 12 years. The Adjudicating Authority's rejection was set aside, and the plan was remitted for approval. The Tribunal clarified the CoC's authority to change votes but not opinions post-voting. All appeals were allowed with no costs.

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Issues Involved:
1. Approval of the Resolution Plan within the stipulated 270 days.
2. Change of voting by members of the Committee of Creditors (CoC).
3. Treatment of first charge holders versus second charge holders.
4. Viability and feasibility of the Resolution Plan.
5. Exclusion of certain periods from the 270-day timeline.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan within the stipulated 270 days:
The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor on 12th July 2017. The Resolution Plan was improved and approved by the CoC with 81.31% voting shares on 6th April 2018. The Adjudicating Authority rejected the plan on the grounds that the total period of 270 days had lapsed by the time the last voting took place. The Appellate Tribunal, however, held that the period from 4th July 2017 to 12th July 2017, when the order was signed and uploaded, should be excluded. Excluding this period, the Resolution Plan was approved within the 270 days.

2. Change of voting by members of the Committee of Creditors (CoC):
The CoC initially had 62.66% votes in favor on 27th March 2018, which was less than the required 75%. However, some members changed their votes in favor, increasing the percentage to 81.31%. Regulation 26(2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which disallowed changing votes, was deemed directory and subsequently deleted. The Tribunal held that the CoC has the authority to extend the voting period and change its opinion to ensure the success of the Resolution Plan.

3. Treatment of first charge holders versus second charge holders:
DBS Bank Ltd. opposed the appeal, claiming its first charge over certain assets of the Corporate Debtor should prevail over second charge holders. The Tribunal referenced the Supreme Court's decision in "ICICI Bank Ltd. vs. Sidco Leathers Ltd. & Ors." and international principles, but concluded that under the I&B Code, all Financial Creditors are treated similarly if they are similarly situated.

4. Viability and feasibility of the Resolution Plan:
The Adjudicating Authority had noted the viability and feasibility of the Resolution Plan, which involved a significant haircut and staggered payments over 15 years. The Tribunal observed that the CoC is empowered to decide on the reasonableness, viability, and feasibility of the plan. The Resolution Applicant agreed to reduce the payment period from 15 years to 12 years, making the plan more viable.

5. Exclusion of certain periods from the 270-day timeline:
The Tribunal cited its decision in "Quinn Logistics India Pvt. Ltd. vs. Mack Soft Tech Pvt. Ltd." and affirmed by the Supreme Court, to exclude the period during which the Interim Resolution Professional did not join. This exclusion justified that the Resolution Plan was approved within the 270 days.

Conclusion:
The Tribunal set aside the Adjudicating Authority's order and held that the Resolution Plan was in conformity with Section 30(2) of the Insolvency and Bankruptcy Code, 2016, and warranted approval. The case was remitted to the Adjudicating Authority to approve the plan with the modification that it be implemented within 12 years. The Tribunal clarified that while the CoC can change its opinion to favor a plan, once it has voted in favor, it cannot change its views. All appeals were allowed with no costs.

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