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of <h1>NCLAT orders Rs. 248 crores distribution to financial creditors under CIRP, rejects future litigation fund deduction</h1> <h3>CFM Asset Reconstruction Private Limited Versus SS Natural Resources Private Limited, Monitoring Agency (Through Mr. Kshitiz Chhawchharia, Ex-Chairman of Monitoring Agency and Ex-Resolution Professional of Ramsarup Industries Limited, Mr. Kshitiz Chhawchharia, Ex-Resolution Professional and Ex-Chairman of Monitoring Agency of Ramsaraup Industries Limited</h3> CFM Asset Reconstruction Private Limited Versus SS Natural Resources Private Limited, Monitoring Agency (Through Mr. Kshitiz Chhawchharia, Ex-Chairman of ... Issues Involved:1. Implementation of the Resolution Plan.2. Distribution of the Upfront Payment.3. Deduction of CoC Expenses and Security Reimbursement.4. Issuance of No Dues Certificate (NDC).Summary:1. Implementation of the Resolution Plan:The appeal was filed by a Financial Creditor challenging the order of the National Company Law Tribunal (NCLT) regarding the implementation of the Resolution Plan for the Corporate Debtor. The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor, and the Resolution Plan submitted by the Successful Resolution Applicant (SRA) was approved by the Committee of Creditors (CoC) and subsequently by the NCLT. The SRA deposited the amount as per the Resolution Plan, but disputes arose regarding the distribution of the amount and the issuance of a No Dues Certificate (NDC).2. Distribution of the Upfront Payment:The SRA deposited Rs. 351 Crores in the controlled account, but the distribution of this amount was contested. The Appellant, holding a 77% Security Interest, claimed entitlement to Rs. 270.28 Crores, objecting to deductions made for CoC Expenses and Security Reimbursement. The CoC had resolved that payments made under CoC Expense Debit Notes would be repaid from resolution proceeds along with interest. The Adjudicating Authority noted that the SRA had fulfilled its part by depositing the amount and directed the Respondent to provide the NDC and execute the assignment agreements.3. Deduction of CoC Expenses and Security Reimbursement:The CoC had agreed that CoC expenses would be reimbursed from the resolution proceeds. The Adjudicating Authority's order approving the Resolution Plan included directions for deducting security expenses incurred by the Financial Creditor, WBIDCL. The Appellant contested these deductions, arguing they were not as per the approved Resolution Plan. The Tribunal found that CoC expenses and security expenses were to be deducted from the upfront payment, but no deduction was required for the Future Litigation Fund.4. Issuance of No Dues Certificate (NDC):The Appellant argued that the NCLT erred in directing the issuance of an NDC without the full payment of its entitlement. The Tribunal agreed that the NDC should only be issued after the Appellant received its dues. The Tribunal modified the NCLT's order, directing the Respondents to make the payment of the principal balance amount along with accrued interest within one week and recalculating the CoC expenses. The Appellant was directed to issue the NDC and execute the assignment agreement after receiving the payment.Conclusion:The appeal was disposed of with directions to the Respondents to make the necessary payments and adjustments, and the Appellant was to issue the NDC and execute the required agreements upon receipt of the payments.
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