2024 (1) TMI 585 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI

Key Issues Raised:

• Exclusion of a creditor (Edelweiss Asset Reconstruction Company) from the Committee of Creditors (CoC).
• Allegations of undervaluation of the Corporate Debtor's assets.
• The Resolution Plan's fairness and compliance with the Insolvency and Bankruptcy Code (IBC), 2016.
• Appellant's right to challenge the Resolution Plan.

Court's Findings:

1. Exclusion of Creditor: The exclusion of Edelweiss Asset Reconstruction Company from the CoC was not found to be irregular, as neither Edelweiss nor Federal Bank (the original creditor) filed a claim with the Resolution Professional.
2. Undervaluation Claims: Claims of undervaluation of assets were not accepted, with the court noting that the appellant had opportunities to raise these issues earlier during the Corporate Insolvency Resolution Process (CIRP).
3. Fairness of Resolution Plan: The Resolution Plan was deemed to be in compliance with the IBC, as it was approved by the CoC with a 100% voting share and met the requirements of Section 30(2) of the IBC.
4. Appellant's Locus to Challenge: The court held that the appellant, being a suspended director and promoter, did not have the locus standi to challenge the Resolution Plan post-approval, referencing the Supreme Court judgment in ‘Ravi Shankar Vedam vs. Tiffins Barytes Asbestos and Paints Limited and Others’.

Decision:

• The appeal was dismissed at the threshold, with the court finding no considerable grounds to entertain the appeal.
• No order as to costs was made.

Conclusion:

The NCLAT upheld the Resolution Plan approved by the CoC, dismissing challenges regarding the exclusion of a creditor, alleged asset undervaluation, and the appellant's right to contest the plan. The court emphasized adherence to the commercial wisdom of the CoC and the limited scope for judicial review in such matters under the IBC.

 

---

Full Text:

2024 (1) TMI 585 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI

Commercial wisdom of committee of creditors governs resolution plan approval, limiting valuation and standing challenges by promoters. Exclusion of the creditor was non irregular as no claim was filed; undervaluation allegations were rejected since opportunities to raise them during the CIRP were not used; the resolution plan satisfied Committee approval requirements and reflected the Committee's commercial wisdom; and a suspended director/promoter lacked standing to challenge the approved plan, underscoring limited judicial interference post approval.