Dismissal of Insolvency Code Sec. 60(5) Application for CoC Meeting on Revised Proposal

The application under section 60(5) of the Insolvency and Bankruptcy Code, 2016 to convene a CoC meeting and consider a revised proposal was dismissed. The Adjudicating Authority ruled that the applicant's submission was not a valid resolution plan, lacking mandatory contents and due diligence. Despite modifications and negotiations, the CoC rejected the proposal, emphasizing feasibility and viability concerns. The RP's decision to file for liquidation was upheld, highlighting the importance of complying with legal provisions and ensuring equitable treatment of all resolution applicants to maximize creditor recovery.

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Issues:
Application under section 60(5) of the Insolvency and Bankruptcy Code, 2016 to call for CoC meeting and consider resolution plan.

Analysis:
The application was filed by the resolution applicant against the RP of JVL Agro Industries Ltd. to convene a CoC meeting and review the proposal dated July 25, 2019. The applicant modified the resolution plan multiple times based on negotiations with the CoC and RP. The revised proposal of Rs. 401 crores was submitted within the CIRP period, but the RP failed to conduct the CoC meeting to discuss it, even when some lenders were willing to consider it. The applicant argued that the RP's action of filing for liquidation instead of presenting the revised proposal to the CoC was contrary to the objectives of the Code, which aim for the resolution of the corporate debtor to maintain its operations and save jobs.

The RP contended that the resolution plan submitted by the applicant was rejected by the CoC with a 71.1% vote. The CoC was informed of the rejection, concluding the process for consideration. The RP clarified that the applicant's email of July 25, 2019, was a revised commercial offer on the rejected plan and not a new resolution plan. The CoC's decision was not solely based on commercial terms but also on feasibility, viability, and the applicant's commitment to implementing the plan.

The Adjudicating Authority noted that the applicant's email was not a resolution plan as per the Code and CIRP Regulations. The Authority emphasized that a standalone commercial offer cannot be considered a resolution plan without mandatory contents and due diligence. Allowing the applicant to resubmit a plan after rejection would go against the Supreme Court's precedent, indicating that the resolution process should be open to all potential applicants to maximize creditor recovery.

Therefore, the application was dismissed based on the observations made, highlighting that the revised offer was not a resolution plan and did not meet the necessary requirements. The Authority emphasized the need for adherence to legal provisions and the equitable treatment of all potential resolution applicants.

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