2020 (11) TMI 551 - AT - Insolvency and Bankruptcy

Tribunal Upholds Approved Resolution Plan Despite Post-Approval Changes

The Tribunal dismissed the appeal of an 'Unsuccessful Resolution Applicant' challenging the rejection of its Resolution Plan by the Committee of ... Implementation of the approved Resolution Plan - Resolution Plan was rejected on the ground that he could not provide for lump sum time bound payment within 30 days of the approval of its Resolution Plan - HELD THAT:- The Appellant has no locus to question the implementation of the approved Resolution Plan of the Successful Resolution Applicant. Admittedly, appeal preferred against approval of the Resolution Plan of the Successful Resolution Applicant stands dismissed by this Appellate Tribunal. Direction given in terms of the impugned order on the application filed under Section 60(5) of the ‘I&B Code’ to the Successful Resolution Applicant follows as a necessary corollary to the dismissal of appeal filed against approval of Resolution Plan of the Successful Resolution Applicant to implement the approved Resolution Plan on or before the extended date of 30th September, 2020. Once the Appellant is out of the fray, it has neither locus to call in question any action of any of the stakeholders qua implementation of the approved Resolution Plan nor can it claim any prejudice on the pretext that any of the actions post approval of the Resolution Plan of Successful Resolution Applicant in regard to its implementation has affected its prospects of being a Successful Resolution Applicant. It is not a case of alleged material irregularity in the Corporate Insolvency Resolution Process which is in final stages with the approved Resolution Plan being under implementation. Outbreak of COVID-19 pandemic has slowed down the economic activity and operations have been adversely impacted. Viewed in that context some necessary changes in the agreed terms and extension of time for implementation would not be uncalled for. Appeal dismissed. Issues:1. Challenge to rejection of Resolution Plan by Committee of Creditors.2. Maintainability of application under Section 60(5) of the Insolvency and Bankruptcy Code.3. Locus standi of the Appellant to question the implementation of the approved Resolution Plan.4. Impact of COVID-19 pandemic on the Resolution Process.Analysis:1. The Appellant, an 'Unsuccessful Resolution Applicant,' challenged the rejection of its Resolution Plan by the Committee of Creditors. The Adjudicating Authority directed the implementation of the approved Resolution Plan of the 'Successful Resolution Applicant.' The Appellant contended that the Committee of Creditors, in collusion with the Successful Resolution Applicant, accepted a new plan post-approval. The Appellant argued that the Adjudicating Authority should not have entertained the application under Section 60(5) of the Insolvency and Bankruptcy Code, as the Committee of Creditors was functus officio after approving the Resolution Plan. The Appellant claimed that the Successful Resolution Applicant failed to implement the plan within the stipulated time, leading to a fresh plan being accepted to its detriment.2. The Tribunal, after hearing arguments, held that the Appellant lacked the standing to challenge the implementation of the approved Resolution Plan of the Successful Resolution Applicant. The Tribunal noted that the appeal against the approval of the plan had been dismissed. Therefore, the direction in the impugned order to implement the plan by a specified date was a natural consequence of the dismissal of the appeal. The Tribunal emphasized that once the Appellant's appeal was rejected, it could not question the actions of stakeholders or claim prejudice due to changes in the Resolution Plan post-approval. The Tribunal highlighted the impact of the COVID-19 pandemic on economic activities, allowing for necessary changes and extensions in the Resolution Process.3. The Tribunal concluded that the Appellant's appeal lacked merit and dismissed it promptly. The decision was based on the Appellant's lack of standing to challenge the Resolution Plan's implementation and the understanding that changes post-approval were reasonable given the pandemic's impact on economic activities. The Tribunal emphasized the importance of upholding approved Resolution Plans and the need for flexibility in exceptional circumstances like the COVID-19 pandemic to ensure successful implementation without jeopardizing the rights of stakeholders.This detailed analysis of the judgment highlights the key issues addressed by the Appellate Tribunal regarding the rejection of the Resolution Plan, the maintainability of the application under the Insolvency and Bankruptcy Code, the locus standi of the Appellant, and the impact of the COVID-19 pandemic on the Resolution Process.