TaxTMI 
TaxTMI 
2021 (7) TMI 406
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....basis of the settlement between the Original Operational Creditor and Respondent no. 2 whereby dues of Operational Creditor have been paid and settled. There are two Intervenors who are opposing this application. One Intervenor is M/s. KKR India Financial Services and another Intervenor is M/s. DSP Investment Managers Pvt. Ltd. who are the Financial Creditors and have got exposure to the tune of Rs. 435 crores and Rs. 134 crores approximately. 3. Learned Counsel for the applicant appeared. After narrating the brief background of the case, firstly, he referred to the order of Hon'ble NCLAT dated 04.01.2021 in the case of Corporate Debtor against order of this Adjudicating Authority admitting the Corporate Debtor into CIRP. In the said order the Hon'ble NCLAT directed the applicant to approach this Adjudicating Authority for seeking exit from CIRP. It was also pleaded that the Hon'ble NCLAT had also directed that Committee of Creditors (hereinafter referred to as "COC") shall not be constituted for one week from the date of its order. Learned Counsel, thereafter, submitted that this Adjudicating Authority further stayed the constitution of COC from time to time in view....
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....red to consider whether exit may be given to the Corporate Debtor from the CIRP process at the stage of the Constitution of COC. 7. That the relevant ratio of the Hon'ble Supreme Court in the case of Swiss Ribbons (pg 36 of the application), speaks of party being permitted to approach NCLT under Rule 11 of NCLT Rules, 2016 for withdrawal/settlement at the stage of prior to Constitution of COC. 8. That section 12A of the IB code provides for a situation only post formation of COC, and section 12A of the IB code reads as follows: "The Adjudicating Authority allow the withdrawal of application admitted under section 7 of the section 9 of section 10, and an application made by the Applicant with the approval of 90 per cent voting share of the committee of creditors, in such manner as may be prescribed." 9. Hence, section 12A of the IB code cannot have any application for seeking exit from CIRP prior to formation of COC. 10. That the other side sought to place reliance on regulation 30A of the CIRP Regulations, where regulation 30 A contemplates a situation for withdrawal prior to Constitution of COC, and such application be made through ....
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.... 14. The Hon'ble Supreme Court in the order dated 14/12/2018 in the case of Brilliant Alloys Private Limited v. S. Rajagopal & Ors. SLP no. 31557 of 2018, lays down the following: "The only reason why the withdrawal was not allowed, though agreed to by the Corporate Debtor as well as the financial creditor State bank of India and the operational creditor - respondent no. 3, is because regulation 30A states that withdrawals cannot be permitted after issue of invitation for expression of interest. According to us, this regulation has to be read along with the main provision of section 12A which contains no such stipulation. Accordingly, this stipulation can only be construed as directory depending on the facts of each case. Accordingly, we allow the settlement that has been entered into and annul the proceedings. The Special Leave Petition is disposed of accordingly." Hereto enclosed is a copy of the order dated 14/12/2018 in the case of Brilliant Alloys Private Limited v. S. Rajagopal 8B Ors. SLP no. 31557 of 2018. 15. Hence, in light of the above it can be seen that the regulation sought to do, which the Act itself did....
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....rent powers under Rule 11 of the NCLAT Rules, 2016 allow the prayer made by Mr. Dharmender Sharma for withdrawal of the application in view of the settlement already reached. We accordingly set aside the impugned order dated 10th January, 2019 and dismiss the C.P. (IB) No. 158/Chd/Hry/2018 as withdrawn. 7. Taking into consideration the fact that we have closed the proceedings, we direct the 'Corporate Debtor' to pay the total sum of Rs. 14.5 Lakhs towards fee and cost incurred by Mr. Sandeep Chandna, (Resolution Professional) within two weeks. So far as the 'Financial Creditors' who wanted to intervene and other 'Operational Creditors' who applied pursuant to the advertisement, this order will not come in their way to take recourse in accordance with law." 21. It is submitted that the Hon'ble NCLAT after taking into consideration the judgment of Swiss Ribbons, does not listen to the intervention of any financial creditors, and permits them to avail the recourse available to them under law. 22. In light of the aforesaid, it is submitted that no intervening financial creditors (including KKR and DSP) have a locus to be heard in t....
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....e rebuttal affidavit of the Applicant). 32. It is submitted that there are serious disputes with such operational creditors qua the subject matter of their respective section 9 petitions. 33. It is submitted that in the event the Corporate Debtor wanted to pay off said Rs. 19 crores, it could very easily have done the same, since the Corporate Debtor has cash of approximately Rs. 700 crores lying in its bank accounts (page 19 of the rebuttal affidavit of the Applicant). 34. It is further submitted that in the event the claim of KKR is taken into consideration which is purportedly approximately Rs. 450 crores, in the event the Corporate Debtor wish to pay it out, the Corporate Debtor has additionally approximately Rs. 3700 crores worth of assets, and it is very easy for the Corporate Debtor to liquidate any such assets and/or use the funds lying in the bank account to pay off KKR. 35. However, the Corporate Debtor strongly believes that there is no debt that is due and payable in the section 7 petition filed by KKR and there is no financial default whatsoever. 36. Further looking to the affidavit filed by KKR, not a single document has be....
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....e there is presently deferment of formation of COC as per the direction of the Hon'ble a plate authority which is extended by this Hon'ble Tribunal no payments have been sanctioned to the related parties. The officers of the Corporate Debtor have raised concerns of shortage of material and in absence of procurement of materials may lead to stoppage of production in very important segment of product line which will impact the top line as well bottom line of the Corporate Debtor and main pack the status of the Corporate Debtor as a going concern. 42. It is submitted that it becomes clear that the lenders are interfering and affecting the status of the Corporate Debtor as a going concern. 43. That the present is not the first case scenario where formation of COC has come to be stayed. 44. That in other matters were COC has come to be stayed the Hon'ble NCLAT has been pleased to pass direction that the interim resolution professional take the assistance of the suspended Board of Directors and officers/directors and employees of the Corporate Debtor to ensure that CD remains as a going concern. One such order dated 23/11/2020 of NCLAT Company Appea....
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....2016 r.w. Rule 11 of NCLT Rules, 2016 would not prejudice the cause of action or merit of the applications filed under Section 9 of IBC, 2016. (iv) Applicant has placed reliance on various judicial decisions to support his case. 6. On the other hand, the plea taken by both Intervenors is that specific Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 exists and Form-FA has also been prescribed for the purpose of withdrawal or setting aside of CIRP after admission of a Corporate Debtor into CIRP and in the present case, application has not been filed in the specified manner therein, hence, the same needs to be dismissed. Secondly, it has been pleaded that after admission of a Corporate Debtor into CIRP, the proceedings become in rem and interests of all stakeholders have to be taken into consideration while disposing of an application filed under Section 12A of IBC, 2016. They have also placed reliance on the decision of Hon'ble Supreme Court in the case of Swiss Ribbons for their contentions. 7. On behalf of Interim Resolution Professional (hereinafter referred to as "IRP"), Learned Senior Counsel appeared from time to....
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....cess for Corporate Persons) Regulation, 2016, being an instance of not being in terms with the provisions of Section 12A of IBC, 2016 has been raised by the applicant and it has also been contended that Rule 11 of NCLT Rules, 2016 was applicable whereas Interveners have pleaded that this application needs to be considered in accordance with the provisions of said Regulation. In this regard, we would have to look into the legislative history relating to the provisions of Section 12A of IBC, 2016 and Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 r.w. Form-FA of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 as applicable from time to time and inter play between such provisions. Further, we may also be required to look into the scope of our jurisdiction under Rule 11 of NCLT Rules, 2016 and whether such rule can be put into operation for disposing of the present application. As far as the applicability of Rule 11 of NCLT Rules, 2016 is concerned, prior to decision of Hon'ble Supreme Court in the case of Swiss Ribbons Pvt. Ltd vs. Union of India, there was some cloud on the applicability of Rule 11 of NC....
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....on account of settlement between the applicant creditor and the corporate debtor, judicial permission for withdrawal of CIRP was granted [Lokhandwala Kataria Construction Pvt. Ltd. v. Ninus Finance & Investment Manager LLP, Civil Appeal No. 9279 of 2017; Mothers Pride Dairy India Private Limited v. Portrait Advertising and Marketing Private Limited, Civil Appeal No. 9286/2017; Uttara Foods and Feeds Private Limited v. Mona Pharmachem, Civil Appeal No. 18520/2017]. This practice was deliberated in light of the objective of the Code as encapsulated in the BLRC Report, that the design of the Code is based on ensuring that "all hey stakeholders will participate to collectively assess viability. The law must ensure that all creditors who have the capability and the willingness to restructure their liabilities must be part of the negotiation process. The liabilities of all creditors who are not part of the negotiation process must also be met in any negotiated solution." Thus, it was agreed that once the CIRP is initiated, it is no longer a proceeding only between the applicant creditor and the corporate debtor but is envisaged to be a proceeding involving all creditors of the debtor. Th....
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....nancial creditors have to put their heads together to allow such withdrawal as, ordinarily, an omnibus settlement involving all creditors ought, ideally, to be entered into. This explains why ninety per cent, which is substantially all the financial creditors, have to grant their approval to an individual withdrawal or settlement. In any case, the figure of ninety per cent, in the absence of anything further to show that it is arbitrary, must pertain to the domain of legislative policy, which has been explained by the Report (supra). Also, it is clear, that Under Section 60 of the Code, the committee of creditors do not have the last word on the subject. If the committee of creditors arbitrarily rejects a just settlement and/or withdrawal claim, the NCLT, and thereafter, the NCLAT can always set aside such decision Under Section 60 of the Code. For all these reasons, we are of the view that Section 12A also passes constitutional muster. 21. From the perusal of above observations, we can see that the Hon'ble Supreme Court has extracted the views expressed, in this regard, in the report of Insolvency Law Committee March, 2018. In the said report, as reproduced here-in-be....
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....e setting aside the CIRP. The other mechanism which was adopted in the absence of any specific provisions in the CODE, Rules and Regulations was that the Hon'ble Supreme Court was approached under Article 136 to the Constitution of India for setting aside the order of CIRP on account of settlement. When such instances became quite frequent, the Hon'ble Supreme Court in the case of Uttara Foods and Feeds Private Limited vs. Mona Pharmachem observed that the some specific provisions were the necessity of the hour so that a mechanism was provided in the law itself whereby such applications or situations could be handled by the Adjudicating Authority without burdening either the Appellate Authority or the Hon'ble Supreme Court. The committee was appointed for review of various provisions of the CODE. The committee submitted its report which lead to insertion of Section 12A and Regulation 30A r.w. Form-FA in CIRP Regulations, 2016. Now, we arrive at second stage. Section 12A was introduced w.e.f. 06.06.2018 which is reproduced as under: 12A. Withdrawal of application admitted under section 7, 9 or 10. The Adjudicating Authority may allow t....
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....case number]. 2. I hereby withdraw the application bearing [particulars of application i.e., diary number/case number] filed by me before the Adjudicating Authority under [Section 7/Section 9/Section 10] of the Insolvency and Bankruptcy Code, 2016. 3. I request the Committee of Creditors to approve my application for withdrawal. 4. I authorize the resolution professional to file this application of withdrawal with the Adjudicating Authority on my behalf, if it is approved by the Committee of Creditors with ninety percent voting power. 5. I attach the required bank guarantee towards estimated cost incurred for purposes of regulation 31(c) and (d) till the date of application. (Signature of the applicant) Date: Place: [Note: In the case of company or limited liability partnership, the declaration and verification shall be made by the director/manager/secretary/designated partner and in the case of other entities, an officer authorized for the purpose by the entity]] 23. From the perusal of substantive provisions as well as subordinate legislation i.e. Regulation 30A and Form-FA it is observed that both w....
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....ve been added to facilitate the process without any hassle. Form FA has also been amended in conformity with amended Regulation 30A. Revised Regulation 30A and Form FA dated 25.07.2019 are reproduced as under: "30A. Withdrawal of application. (1) An application for withdrawal under section 12A may be made to the Adjudicating Authority - (a) before the constitution of the committee, by the applicant through the interim resolution professional; (b) after the constitution of the committee, by the applicant through the interim resolution professional or the resolution professional, as the case may be: Provided that where the application is made under clause (b) after the issue of invitation for expression of interest under regulation 36A, the applicant shall state the reasons justifying withdrawal after issue of such invitation. (2) The application under sub-regulation (1) shall be made in Form FA of the Schedule accompanied by a bank guarantee-(a) towards estimated expenses incurred on or by the interim resolution professional for purposes of regulation 33, till the date of filing of the application under clause (a) of sub-regulation (1); o....
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....rs of application, i.e., diary number/case number] on [Date of filing] before the Adjudicating Authority under [Section 7/Section 9/Section 10] of the Insolvency and Bankruptcy Code, 2016. The said application was admitted by the Adjudicating Authority on [date] bearing [case number]. 2. I hereby withdraw the application bearing [particulars of application, i.e., diary number/case number] filed by me before the Adjudicating Authority under [Section 7/Section 9/Section 10] of the Insolvency and Bankruptcy Code, 2016. 3. I attach the required bank guarantee as per sub-regulation (2) of regulation 30A. (Signature of the applicant) Date: Place: [Note: In the case of company or limited liability partnership, the declaration and verification shall be made by the director/manager/secretary/designated partner and in the case of other entities, an officer authorised for the purpose by the entity] 25. When we compare the provisions of Regulation 30A which were inserted in the CIRP regulations after the insertion of Section 12A and amended regulation 30A as effective from 25.07.2019, it is noted that stage of pre-constitution of C....
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....d amendment, in Section 12A would have been carried out firstly. Such approach of the legislature, in fact, leads to an inference that legislature thought it fit to leave disposal of such cases to the discretion of Adjudicating Authority /NCLAT under Rule 11 of respective Rules, (ii) Second question which is critical and important from the aspect of constitutional propriety is whether the route of delegated legislation/subordinate legislation can be resorted to in such manner particularly when that exercise results into a manifest inconsistency between the substantive provision of law and such subordinate legislation. It may not be out of place to mention that Hon'ble Supreme Court in the absence of provision at the nature of Section 12A authorized the Adjudicating Authority to give the necessary relief by applying the provisions Rule 11 of NCLT Rules, 2016. In view of above position of law, we are of the view that in view of specific provisions of Section 240(1), such regulation being inconsistent to the main provisions of the CODE, this part of regulation 30A is not binding on us. Having said so, we are further of the view that in view of the inherent power of this Adjudicati....
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....uments, record and evidence of default), as quoted below:- PART V PARTICULARS OF FINANCIAL DEBT [DOCUMENTS, RECORDS AND EVIDENCE OF DEFAULT] 1. PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS CREATION, ITS ESTIMATED VALUE AS PER THE CREDITOR. ATTACH A COPY OF A CERTIFICATE OF REGISTRATION OF CHARGE ISSUED BY THE REGISTRAR OF COMPANIES (IF THE CORPORATE DEBTOR IS A COMPANY) 2. PARTICULARS OF AN ORDER OF A COURT, TRIBUNAL OR ARBITRAL PANEL ADJUDICATING ON THE DEFAULT, IF ANY (ATTACH A COPY OF THE ORDER) 3. RECORD OF DEFAULT WITH THE INFORMATION UTILITY, IF ANY (ATTACH A COPY OF SUCH RECORD) 4. DETAILS OF SUCCESSION CERTIFICATE, OR PROBATE OF A WILL, OR LETTER OF ADMINISTRATION, OR COURT DECREE (AS MAY BE APPLICABLE), UNDER THE INDIAN SUCCESSION ACT, 1925 (10 OF 1925) (ATTACH A COPY) 5. THE LATEST AND COMPLETE COPY OF THE FINANCIAL CONTRACT REFLECTING ALL AMENDMENTS AND WAIVERS TO DATE (ATTACH A COPY) 6. A RECORD OF DEFAULT AS AVAILABLE WITH ANY CREDIT INFORMATION COMPANY (ATTACH A COPY) 7. COPIES OF ENTRIES IN A BANKERS BOOK IN ACCORDANCE WITH THE BANKERS BOOKS EVIDENCE ACT, 1891 (18 OF 1891) ....
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....Section 33(3) provides that any person, other than the corporate debtor, whose interests are prejudicially affected by an act of contravention of resolution plan by the successful resolution applicant, such person can file an application to the Adjudicating Authority for passing of a liquidation order. In Regulation 39(9), it is provided that a creditor who is aggrieved by non-implementation of resolution plan approved under sub-section 1 of Section 31 may apply to the Adjudicating Authority for directions. Such regulation does not specify as to what directions can be given on happening of event of non-implementation of an approved resolution plan other than the order of liquidation under Section 33(3) of the CODE. This sub-regulation has been brought on CIRP Regulation w.e.f. 24.01.2019 and it is in an apparent conflict that the specific provisions of Section 33(3) of the CODE as it creates a situation of different options to different category of the people even though the creditor would certainly be an aggrieved party but an aggrieved party as mentioned in Section 33(3) can be a person other than the creditor as well subject to locus of such party to intervene in the matter of n....
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....) of the Code, it means that specified by Regulations made by IBBI under this Code. 11. Thus, on the basis of above legal analysis, it can be safely concluded that in a situation where COC is not formed after admission of Corporate Debtor into CIRP, Rule 11 of NCLT Rules, 2016 would be applicable and not the Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 as pleaded by the Intervenors. Although, substantial aspects in respect of this issue have already been considered in the aforesaid case, as reproduced here-in-before which are sufficient to dispose of the matter by exercising inherent powers of Rule 11 of NCLT Rules, 2016, however, a specific plea has also been raised on behalf of applicant that Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 is beyond the scope of powers given to IBBI to make secondary legislation or delegated legislation under Section 240 of IBC, 2016, hence, for this reason also it is null and void to the extent, it is inconsistent with Section 12A of IBC, 2016. Hence, we consider it appropriate to look into this aspect a little only with respect to conflict betwee....
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....re the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation. 12. From the perusal of Section 239 and Section 240 of IBC, 2016, it is apparent that a general power of making Rules and Regulations for carrying out the provisions of this Code has been given to both Central Government and IBBI. It is noteworthy that under Section 240(1) of IBC, 2016, an obligation has further been cast upon IBBI to make Regulations consistent not only with the Code but also with the Rules made by the Central Government there-under. Thus, the power of the IBBI is further restricted as compared to the powers given to the Central Government. Both Section 239(2) and Section 240(2) of IBC, 2016 provide instances where Rules/Regulations can be made for matters....
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....rd under this Act, shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation. 14. On the face of it, provisions of provisions of Section 469(2) of Companies Act, 2013 give much wider powers to Central Government in a sense that Central Government could also make Rules for situations not covered by substantive legislation as compared to Section 239(2) and Section 240(2) of IBC, 2016 wherein specific situations would have to be covered by the parliament at the first instance and, only thereafter, Rules/Regu....
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....owever, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation.] 15. Before, proceed with comparative analysis of provisions of Section 469 of Companies Act, 2013 and Section 642 of Companies Act, 1956, it is pertinent to mention that Section 426 was introduced by an amendment in 2002 which was almost analogous to Section 469 as it exists today. Section 642(1), as noted, had two clauses (a) 8B (b) which have been merged in Section 469(1) of the Companies Act, 2013. The provision contained in Section 469(2) did not exist, hence, this is a material departure. Further, Section 469(2) can be split in two parts for proper understanding. First part-without prejudice to the generally of provision of sub clause (1), Central Government may make rules for all or any of the matters which by this Act are required to be, or may be prescribed. Second part - without prejudice to the generally of provision of sub clause (1), Central Government may make rules for all or any of the matters in respect of which provision is to be made or may be made by rules. As far as first part is concerned, it deno....
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....s of Section 240(1) of IBC, 2016 to a limited extent that such provision, being inconsistent to the provisions of the Code, cannot be applied in the facts and circumstances of the case in view of provisions of Section 240 of IBC, 2016. 17. Admittedly, NCLT is the Adjudicating Authority in terms of provisions of Section 5(1) of IBC, 2016. The Hon'ble Supreme Court, in the case of B.K. Educational Society, has also held that provisions of NCLT Rules, 2016 would be applicable while discharging of the functions by NCLT as Adjudicating Authority under IBC, 2016. Thus, having regard to provisions of Section 469(2) of Companies Act, 2013, NCLT can exercise its inherent jurisdiction under Rule 11 of NCLT Rules, 2016 for a situation not specifically covered under any provisions of IBC, 2016. It is needless to mention that NCLT Rules, 2016 are also applicable to IBC proceedings where no specific Rules/Regulations have been prescribed under IBC, 2016 for that situation. It has also been held that Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 cannot be applied to this situation since this Regulation is inconsistent with the provisions of ....
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.... such joint shareholder is not having any interest in the subject matter. Therefore, the prima facie locus of the applicant gets established. In this regard, we may further add that various stakeholders are involved and having regard to preamble of IBC, 2016, an interested stakeholder can approach this Authority with the request to exercise its inherent jurisdiction under Rule 11 of NCLT Rules, 2016 in respect of proceedings of this nature subject to compliance of other legal requirements. In this view of the matter and after holding that Regulation 30A of IBBI (CIRP) Regulations, 2016 is not applicable, we reject the contention of the Intervenor that application must be filed by IRP at the instance of concerned Operational Creditor. Fourth aspect, whether facts of the case justify the exercise of inherent jurisdiction at all or not? As far as first two aspects are concerned, we have already discussed the legal position and are aware of such limitations. Now, coming to the third aspect, it is worthwhile to mention that inherent jurisdiction is equity jurisdiction which is exercised to meet the ends of substantial justice, hence, person seeking relief must come with clean hands. In ....
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....takeholders who come before this Adjudicating Authority during consideration of the application filed either under Section 12A of IBC, 2016 or Rule 11 of NCLT Rules, 2016 for setting aside an order of admission of a Corporate Debtor into CIRP. This is also so because if all the claimants have to be given opportunity even if they have not approached this Adjudicating Authority in the withdrawal of CIRP proceedings, that by-itself would make the process of withdrawal redundant as timelines are sacrosanct under IBC, 2016 and giving opportunity to all such stakeholders would defeat the very purpose of bringing Section 12A of IBC, 2016 on statute. Similar position applies to proceedings under Rule 11 of NCLT Rules, 2016 as the basic object of IBC, 2016 cannot be defeated even when the inherent jurisdiction under Rule 11 is exercised. In the present case, after the admission of a Corporate Debtor into CIRP, various applications filed under Section 9 of IBC, 2016 were disposed of in view of the admission of the Corporate Debtor into CIRP and such creditors were directed to approach IRP. However, based upon the records, no such creditors have approached this Authority opposing the withdraw....
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....m the economic activity being undertaken by Corporate Debtor. Further, considering the structure of IBC, 2016, it would be in the interests of all stakeholders including secured Financial Creditors and Operational Creditors to ensure the Corporate Debtor is not put into CIRP to the extent possible, otherwise, there may be a situation of substantial haircuts for all categories of stakeholders and in that process Operational Creditors being unsecured creditors including Government would be the main sufferers as they may even not get anything either in resolution or liquidation of the Corporate Debtor. Even otherwise, in the facts of the present case, having regard to the amount claimed by various Operational Creditors and financial resources available with the Corporate Debtor to meet such liabilities leads to a conclusion that Corporate Debtor can meet such obligations in the case of Operational Creditors where there is no dispute raised by Corporate Debtor and, hence, such Operational Creditors stand to recover their undisputed amount in full through this process. 20. The applicant has also claimed that IRP was taking instructions from lenders instead of suspended management whi....