Appeals Dismissed: Appellants not Financial Creditors. Guarantees Rejected under Bankruptcy Code

The Tribunal dismissed the appeals, ruling that the Appellants were not considered Financial Creditors of the Corporate Debtor. The claims were rejected due to the absence of disbursement against the time value of money and the lack of suffered loss by the Appellants. The Tribunal found that the guarantees invoked did not meet the criteria for financial debt under the Insolvency and Bankruptcy Code. The rejection of claims by the Resolution Professional was upheld, emphasizing the insufficiency of evidence provided by the Appellants to support their claims.

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Issues Involved:
1. Whether the Appellants can be considered as Financial Creditors of the Corporate Debtor.
2. Interpretation of Clause 5.10 of the Purchase Agreement dated 04.03.2015.
3. Applicability of Section 5(8)(h) of the Insolvency and Bankruptcy Code, 2016.
4. Analysis of the claims filed by the Appellants and their rejection by the Resolution Professional.

Issue-wise Detailed Analysis:

1. Whether the Appellants can be considered as Financial Creditors of the Corporate Debtor:
The Appellants, who were Promoters of the Corporate Debtor, had given Personal and Corporate Guarantees to secure financial facilities extended to the Corporate Debtor. The Appellants claimed to be Financial Creditors based on the invocation of these guarantees. However, the Tribunal noted that for a debt to be considered a 'financial debt,' it must be disbursed against the consideration for the time value of money. The Appellants had not disbursed any amount to the Corporate Debtor; thus, their claim did not meet the criteria for being considered Financial Creditors under Section 5(8) of the Code.

2. Interpretation of Clause 5.10 of the Purchase Agreement dated 04.03.2015:
Clause 5.10 of the Purchase Agreement stated that the Acquirer and the Corporate Debtor agreed to indemnify the Promoter Guarantors for any loss suffered due to the enforcement of guarantees. The Tribunal found that this clause did not constitute a counter-indemnity obligation in respect of the guarantees dated 31.03.2015 and 30.03.2015, as these guarantees were executed after the Purchase Agreement. Furthermore, the Appellants had not suffered any loss since no payments had been made towards the invoked guarantees.

3. Applicability of Section 5(8)(h) of the Insolvency and Bankruptcy Code, 2016:
Section 5(8)(h) includes any counter-indemnity obligation in respect of a guarantee, indemnity, bond, or other instruments issued by a bank or financial institution as a financial debt. The Tribunal concluded that Clause 5.10 of the Purchase Agreement did not fulfill the conditions of Section 5(8)(h) since it was not a counter-indemnity obligation in respect of the guarantees in question. The Appellants' claim was based on the invocation of the guarantees, and Clause 5.10 could not be relied upon to satisfy the conditions of Section 5(8)(h).

4. Analysis of the claims filed by the Appellants and their rejection by the Resolution Professional:
The Appellants filed their claims in Form-C, citing the invocation of the guarantees. The Resolution Professional rejected these claims, stating that no payments had been made by the Appellants towards the invoked guarantees, and thus, there was no financial debt owed to them by the Corporate Debtor. The Tribunal upheld this rejection, noting that the Appellants had not provided sufficient evidence to substantiate their claims as Financial Creditors. The Tribunal also considered relevant clauses in the Personal Guarantee, which waived the Appellants' rights to enforce certain claims, further supporting the rejection of their claims.

Conclusion:
The Tribunal dismissed the appeals, concluding that the Appellants did not meet the criteria to be considered Financial Creditors of the Corporate Debtor. The claims were rightly rejected by the Resolution Professional and the Adjudicating Authority for valid reasons, including the lack of disbursement against the consideration for the time value of money and the absence of any suffered loss by the Appellants.

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