Liquidation scheme of arrangement approved for stakeholder consideration with notice, voting and sanction procedures directed.

In liquidation, the Tribunal allowed a composite scheme of arrangement to be placed before stakeholders and framed a modified participation process. It directed constitution of the stakeholders committee, representation of stakeholder classes through authorised representatives where applicable, issuance of notices and advertisements, circulation of the scheme synopsis, electronic voting, and submission of the approved scheme for sanction. The approach reflects the statutory framework under the Companies Act, 2013, the Insolvency and Bankruptcy Code, 2016 and the liquidation regulations, recognising that a scheme may still be considered during liquidation where stakeholder consultation is undertaken.

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Issues: Whether, in a liquidation proceeding, the Tribunal should permit the liquidator to convene a stakeholders committee meeting to consider a composite scheme of arrangement and issue consequential directions for notice, publication, representation, voting and placement of the scheme for sanction.

Analysis: The application was filed by the liquidator for directions under the Companies Act, 2013, the Insolvency and Bankruptcy Code, 2016 and the liquidation regulations to place a composite scheme of arrangement before the stakeholders of the company in liquidation. The Tribunal noted that the scheme involved secured creditors, unsecured creditors, statutory authorities, employees and shareholders, and that a stakeholders consultation committee had already been constituted. Relying on the statutory framework and the judicial approach permitting consideration of a scheme during liquidation, the Tribunal framed a modified procedure for stakeholder participation. It directed constitution of the stakeholders committee, representation of classes of stakeholders through authorized representatives where applicable, issuance of notices and advertisements, electronic voting and circulation of the scheme synopsis, and submission of the approved scheme for sanction.

Conclusion: The Tribunal permitted the scheme to be placed before the stakeholders committee and issued the requested procedural directions.

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