Tribunal upholds rejection of Resolution Plan, offers final chance to revive Corporate Debtor

The Tribunal upheld the Adjudicating Authority's decision to reject the approval of the Resolution Plan due to non-compliance with the Code and CIRP Regulations. It emphasized the need to consider other Resolution Applicants and provided a final opportunity to revive the Corporate Debtor. The liquidation order was kept in abeyance to allow for this effort, with a clear timeline and conditions for the process.

---

---

Issues Involved:
1. Eligibility of Appellants to submit the Resolution Plan.
2. Compliance with the Code and CIRP Regulations.
3. Consideration of other Resolution Applicants.
4. Adjudicating Authority's order and its implications.
5. Revival of Corporate Debtor vs. Liquidation.

Detailed Analysis:

1. Eligibility of Appellants to Submit the Resolution Plan:
The Adjudicating Authority held that the Appellants were not eligible to submit the Resolution Plan under Section 29A read with Section 240A of the Code, as they were not eligible when the application for submitting EOI was issued. It was observed that the registration of the Corporate Debtor as an MSME could not operate retrospectively to make them eligible.

2. Compliance with the Code and CIRP Regulations:
The Adjudicating Authority found that the Resolution Plan submitted by the Appellants was not in compliance with the Code and CIRP Regulations. Specifically, the CoC did not invite other Resolution Applicants, which was necessary to ensure a level playing field. The CoC's decision to consider only the Appellants' plan without issuing a fresh Form G was seen as a breach of the procedural requirements.

3. Consideration of Other Resolution Applicants:
The Adjudicating Authority's order dated 28.09.2021 directed the Resolution Professional to call a lenders meeting and deliberate on whether more Resolution Applicants could be invited. However, the CoC did not follow this directive and did not issue a fresh Form G to invite other Resolution Applicants. This failure was criticized by the Adjudicating Authority, which emphasized that the CoC should have taken steps in accordance with the CIRP Regulations.

4. Adjudicating Authority's Order and Its Implications:
The Adjudicating Authority's order dated 28.09.2021 extended the CIRP period and directed the consideration of the Appellants' Resolution Plan. However, it also required the CoC to consider other Resolution Applicants. The CoC's failure to do so led the Adjudicating Authority to reject the approval of the Resolution Plan and order liquidation. The Tribunal upheld this decision, affirming that the CoC's actions were not in line with the procedural requirements.

5. Revival of Corporate Debtor vs. Liquidation:
The Tribunal recognized the importance of making efforts to revive the Corporate Debtor before resorting to liquidation. It provided a time-bound opportunity for the Resolution Professional to issue a fresh Form G and consider willing Resolution Applicants, including the Appellants. The liquidation order was kept in abeyance to allow for this effort. If a Resolution Plan is approved within 90 days, the liquidation order will become inoperative; otherwise, the Corporate Debtor will be put into liquidation.

Conclusion:
The Tribunal upheld the Adjudicating Authority's decision to reject the approval of the Resolution Plan due to non-compliance with the Code and CIRP Regulations. It emphasized the need to consider other Resolution Applicants and provided a final opportunity to revive the Corporate Debtor. The liquidation order was kept in abeyance to allow for this effort, with a clear timeline and conditions for the process.

---