TaxTMI 
TaxTMI 
2022 (4) TMI 522
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....A No. 358 of 2020. b) Pass appropriate order declaring 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. ....
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....h challenged by the Resolution Professional. b. There is deliberate non-compliance on the part of the Resolution professional and the same 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 co....
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....pany Appeal (AT) (Insolvency) No. 1002 of 2021 was filled by the Resolution Professional before Hon'ble NCLAT challenging the order dated 25.10.21, which was disposed of with the observation 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)(....
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....de for satisfaction or modification of any security interest. Security interest is defined by Section 3(31) of the Code as follows: "3. Definitions.--In this Code, unless the context otherwise requires,-- 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....
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.... erstwhile management, but due to other factors which may be beyond their control, which have led to nonpayment of the debt. Therefore, a combined reading of the Code as well as the Regulations leads to the conclusion that members of the erstwhile Board of Directors, 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 prese....