Bank accepts settlement proposal ending insolvency proceedings against corporate debtor and guarantors under Section 95 NCLAT Principal Bench allowed appeals after bank accepted OTS proposal from corporate debtor and guarantors. Settlement agreement was recorded and CIRP ...
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Bank accepts settlement proposal ending insolvency proceedings against corporate debtor and guarantors under Section 95
NCLAT Principal Bench allowed appeals after bank accepted OTS proposal from corporate debtor and guarantors. Settlement agreement was recorded and CIRP proceedings against corporate debtor, corporate guarantors, and Section 95 proceedings against personal guarantors were closed. Impugned orders dated 04.07.2023, 08.12.2023, and 06.12.2023 were set aside. CIRP terminated with all parties freed from proceedings. Personal guarantors paid Rs.2 lakhs each to IRP. Appellant required to pay Rs.5 lakhs within two weeks if not already paid. Deposited amount in company appeal to be transferred to bank per settlement terms.
Issues involved: CIRP initiated against Corporate Debtor, Personal Guarantor, and Corporate Guarantors; Settlement Agreement approval; OTS proposal acceptance; Section 7 application admission.
CIRP Proceedings and OTS Proposal: The appeals arose from CIRP initiated against the Corporate Debtor, Personal Guarantor, and Corporate Guarantors. An application was filed to bring the Settlement Agreement on record, along with the approval of an OTS proposal by the Bank of India. The Tribunal passed an order regarding the deferment of the pronouncement of the order due to the OTS proposal submitted after the reserved order date, citing RBI Circular requirements for policy framing. The Bank expressed no objection to deferring the order pronouncement based on the OTS proposal.
Contentions and Considerations: The Appellant's Senior Counsel argued for deferral based on the OTS proposal and the Bank's no objection stance. The Bank highlighted the rejection of previous OTS proposals and the impact of the RBI Circular on considering the latest proposal. The Tribunal considered the sequence of events, acknowledging the need for policy framing as per the RBI Circular.
Judicial Decision and Directions: The Tribunal directed the Appellant to deposit the OTS amount with the Registrar of NCLAT within three months, allowing one opportunity for payment. The Appellant complied with the order by depositing the amount. The Tribunal closed the CIRP proceedings against the Corporate Debtor, Corporate Guarantors, and Personal Guarantors based on the Settlement Agreement terms. The impugned orders were set aside, and liberty was granted to the Bank for future applications.
Payment and Closure: The Tribunal closed the CIRP proceedings against the entities and set aside previous orders. The Bank was granted liberty to revive proceedings as per the Settlement Agreement terms. Payments were made to the IRP for the Personal Guarantors' appeals, and the Appellant was directed to pay any outstanding amounts within a specified timeframe. The amount deposited in one appeal was to be handed over to the Bank of India as per the Settlement Terms.
Conclusion: All appeals were disposed of accordingly, with the CIRP proceedings closed, entities freed from CIRP, and necessary payments and handovers directed as per the Settlement Agreement terms.
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