2026 (2) TMI 565 - AT - IBC

Disclosure of valuation reports under Regulation 35 - summary liquidation value suffices; request for full reports denied, appeal dismissed.

Regulation 35 permits disclosure only of summary liquidation value to Committee of Creditors; the resolution professional therefore had no obligation to ... Disclosure limited to summary fair value and liquidation value under Regulation 35 - no obligation to provide full valuation report to CoC members prior to amendment - confidentiality undertakings for members of the committee of creditors - procedural fairness and transparency - natural justice - residuary jurisdiction u/s 60(5) of the Code - challenge to distribution to dissenting creditors pending adjudication - HELD THAT:- It is to be noted that the application IA/2034/2024 praying for payment of an additional Rs. 20.23 crore from the resolution plan amount is still under consideration before Ld. Adjudicating Authority. Admittedly, the legislature had consciously provided for that only the liquidation value in summary form is to be provided to the members of the CoC and not the full valuation reports. Accordingly, the RP has acted and it cannot be said that he has acted against the provision of the Code. Further the order of the Adjudicating Authority holding the action of the RP as correct cannot be faulted. Further, the Appellant admittedly had not contested the liquidation value as provided to him during the CIRP period and never questioned the valuation process. In that context, his attempt to seek the full set of valuation reports by portraying the valuation process as vitiated and defective resulting in undervaluation appears to be an afterthought. The Appellant has contended that he should have been provided with the valuation reports on the grounds of natural justice and fair play. But he has not been able to demonstrate before Ld. Adjudicating Authority that there was unfair play and justice has been denied to him, while denying him access to the full set of valuation reports in violation of the provisions of the Code. In any case it is still open for him to agitate his grievances regarding payment of a lesser amount than what he was entitled for as IA/2034/2024 is still under consideration before Ld. Adjudicating Authority. Thus, we are of the view that the impugned order does not merit any interference at our hands. The appeal is accordingly dismissed. Issues: Whether the Adjudicating Authority erred in refusing to direct the Resolution Professional to produce the full valuation reports and minutes of the monitoring committee to a dissenting financial creditor seeking to challenge the post-approval distribution under an approved resolution plan.Analysis: Regulation 35, as it existed at the relevant time, provided for disclosure of fair value and liquidation value in summary form to members of the Committee of Creditors on receiving confidentiality undertakings, and did not mandate sharing of full valuation reports. The Resolution Professional supplied the liquidation value in summary form and acted within the regulatory framework; the applicant had not previously contested the liquidation value during the CIRP and did not demonstrate unfairness or denial of natural justice that would warrant overriding the regulatory confidentiality regime. The challenge to the distribution amount remains a separate pending proceeding before the Adjudicating Authority.Conclusion: The Adjudicating Authority's refusal to direct production of the full valuation reports and minutes is upheld; the application seeking production of full valuation reports is dismissed.