Pro-rata Distribution of Liquidation Proceeds Under IBC Section 53(1) Upheld Over Exclusive Security Interest Claims

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....NCLAT dismissed appeal regarding distribution of liquidation proceeds under IBC's waterfall mechanism. Following failed CIRP, dispute arose over distribution method - whether based on security interest or pro-rata as per admitted claims under Section 53(1). Tribunal upheld earlier precedent from Oriental Bank case, rejecting exclusive distribution to creditor with charge over corporate debtor's property. Stakeholder undertakings regarding return of excess distributions under Regulation 43 of Liquidation Process Regulations were deemed not to affect redistribution rights. Adjudicating Authority's direction for pro-rata distribution based on admitted claims of Financial Creditors was affirmed as legally sound.....