Tribunal upholds CoC decision on resolution plan citing commercial feasibility, payment terms, and procedural compliance

The Tribunal upheld the decision of the CoC to approve a different resolution plan over the Applicants' plan, citing commercial feasibility and concerns over payment terms and personal guarantees. The CoC's decision was deemed valid, as the Applicants failed to timely revise their plan during the meeting. The Tribunal found no procedural irregularities or violations of the Insolvency and Bankruptcy Code, ultimately rejecting the Applicants' challenge to the CoC meeting decision and direction to consider their resolution plan.

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Issues:
Challenge to CoC meeting decision and direction to consider resolution plan.

Analysis:
The application was filed under section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking to quash the 7th CoC meeting dated 13.10.2021 and direct the Respondents to consider the Applicants' resolution plan. The Applicants argued that their plan was unfairly rejected in favor of another applicant's plan. The Applicants' initial offer was Rs. 8,32,90,000/-, later revised to Rs. 14,21,00,000/- with a payment term of 6 years. However, they were asked to further revise their plan during the CoC meeting. The CoC approved a different resolution plan with a lower offer than the Applicants' final revised amount of Rs. 9,40,00,000/-. The Applicants alleged procedural irregularities and violation of the IB Code in the CoC meeting.

The Respondents contended that the CoC properly considered all resolution plans, including the Applicants', but found the successful resolution plan more feasible and viable. The CoC raised concerns about the payment term and the proposal to extinguish personal guarantees, which influenced their decision. The Applicants were given an opportunity to revise their plan during the meeting but failed to do so within the specified time. The CoC ultimately approved the resolution plan they deemed most beneficial for maximizing the Corporate Debtor's assets.

The Tribunal examined the sequence of events during the 7th CoC meeting and found that the Applicants were given a fair chance to present their revised plan. However, the Applicants' failure to submit the revised plan within the set timeframe was noted. The CoC's decision to approve the other resolution plan was based on commercial wisdom and feasibility, not solely on the offered amount. The Tribunal concluded that there was no violation of the IB Code by the Respondents during the meeting and subsequently rejected the Applicants' application.

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