2022 (4) TMI 522
X X X X Extracts X X X X
X X X X Extracts X X X X
....eclaring that personal guarantees given by the Applicants to financial creditors of corporate debtor (Respondent No. 2 to Respondent No. 5) shall stand extinguished in the event the resolution plan filed in IA 358 of 2020 is approved by this Hon'ble Adjudicating Authority, in the manner in which it is filed, with regard to the aspect of personal guarantees. c) Pass appropriate order declaring that mortgage of the personal assets of the Applicants mortgaged with the financial creditors of the corporate debtor (Respondent 2 to Respondent 5) shall stand extinguished in the event the resolution plan filed in IA 358 of 2020 is approved by this Hon'ble Adjudicating Authority, in the manner in which it is filed with regard to the aspect of mortgages. d) Pass appropriate order declaring that resolution approving resolution plan passed by the CoC in its 8th meeting dated 26.02.2020 is illegal, null, and void (including in light of 3 different minutes of the meeting circulated by the Resolution Professional which are contradictory to each other) and pass appropriate order setting aside and quashing the same. e) Pass appropriate order reducing the claim of State Bank of India (R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me calls for contempt of court proceedings against the resolution Professional. c. The Resolution Professional has filed the valuation report. It is seen from the resolution plan that the assets of the corporate debtor are being sold at a throw-away price which is contrary to the object of the IB Code. which provides for the maximization of value of assets of the corporate debtor. 4. During the arguments the learned counsel of the Applicants pressed for prayer 'f(ii)' before progressing further and requested to the limited issue of supplying a copy of valuation report to the ex-directors to enable them to point out the anomalies in valuation reports, before passing any order, which may be highly prejudicial to the corporate debtor leading to defeating the intent of resolution of corporate debtor through CIRP. The Resolution Professional vehemently objected to the prayer of ex-directors seeking copy of valuation report. After hearing both sides the order was reserved on a limited issue whether ex-directors be given copy of valuation report of the assets of corporate debtor with reference to the prayer f(ii), which is reproduced hereunder for ready reference Prayer 'f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rvation that Learned Adjudicating Authority shall endeavor to dispose of the applications IA No. 358/2020 and IA No. 434/2020 on the date fixed if possible or at an early date thereafter. 8. Heard submissions and perused the documents on record. It is observed that the Adjudicating Authority vide order dated 15.12.2020, directed Resolution Professional to file liquidation value and valuation report before this Authority with a copy to the other side, which was challenged by Resolution Professional before Hon'ble NCLAT. The Appellate Authority found it appropriate for the Adjudicating Authority to re-look at the impugned order to the extent of providing liquidation value and a valuation report to the erstwhile directors/promoters. 9. It is further noted that in the 7th CoC meeting dated 13th February 2020, the Resolution Professional presented the valuation report before the members of the committee for discussion. However, as per section 24(3)(b) of the IB Code read with regulation 21(3)(iii) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the Resolution Professional shall give notice of each meeting of the CoC to the members of the suspen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s,-- xxx xxx xxx (31) "security interest" means right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing payment or performance of any obligation of any person: Provided that security interest shall not include a performance guarantee; xxx xxx xxx" This would certainly include a guarantor who may be a member of the erstwhile Board of Directors. Further, under Regulation 37(1)(f), a resolution plan may provide for reduction in the amount payable to the creditors, which again vitally impacts the rights of a guarantor. Last but not least, a resolution plan which has been approved or rejected by an order of the Adjudicating Authority, has to be sent to "participants" which would include members of the erstwhile Board of Directors - vide Regulation 39(5) of the CIRP Regulations. Obviously, such copy can only be sent to participants because they are vitally interested in the outcome of such resolution plan, and may, as persons aggrieved, file....
X X X X Extracts X X X X
X X X X Extracts X X X X
....irectors, being vitally interested in resolution plans that may be discussed at meetings of the committee of creditors, must be given a copy of such plans as part of "documents" that have to be furnished along with the notice of such meetings. 15. As a result of the aforesaid discussion, the arguments of the respondents that "committee" and "participant" are used differently, which would lead to the result that resolution plans need not be furnished to the erstwhile members of the Board of Directors, must be rejected. Equally, the Regulations, far from going beyond the Code, flesh out the true intention of the Code that is achieved by reading the plain language of the Sections that have already been adverted to. So far as confidential information is concerned, it is clear that the resolution professional can take an undertaking from members of the erstwhile Board of Directors, as has been taken in the facts of the present case, to maintain confidentiality. The source of this power is Regulation 7(2)(h) of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, read with paragraph 21 of the First Schedule thereto. This can be in the form of a non....