NCLAT Delhi: Treatment Of Income Tax Dues In The Resolution Plan As 'Operational Creditor' Doesn't Violate Section 30(2) Of IBC

Case Title: Jaiprakash Associates Ltd. vs. Jaypee Infratech Ltd. and Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 548 of 2023

The National Company Law Appellate Tribunal ('NCLAT') Delhi, comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that treatment of the Income Tax Department's dues in the Resolution Plan as 'Operational Creditor' is not violative of Section 30(2) of IBC.

NCLT Can't Direct CoC To Consider Suspended Management's Settlement Proposal, Without Opportunity To SRA: NCLAT Delhi

Case title: One City Infrastructure Pvt. Ltd. v Pratham Expofab Private Limited & Ors.

Case No.: Company Appeal (AT) (Insolvency) No.287 of 2024

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Shri Barun Mitra (Technical Member) and Shri Arun Baroka (Technical Member), has held that the NCLT cannot direct the CoC to consider settlement proposal of Suspended Management of Corporate Debtor, without granting an opportunity to be heard to the Successful Resolution Applicant (SRA).

During the pendency of plan approval application before NCLT, the Suspended Management filed an application seeking consideration of their settlement proposal by Committee of Creditors (“CoC”). The NCLT did not accord any opportunity to SRA to file its response to the application and directed the CoC to consider the settlement proposal vis-à-vis the resolution plan. The NCLAT has set aside the NCLT order.

NCLAT Delhi: Non-Grant Of Reliefs And Concessions By NCLT Does Not Have Any Adverse Effect On The Validity Of The Resolution Plan And Is Not Violative Of The Law

Case Title: Jaiprakash Associates Ltd. vs. Jaypee Infratech Ltd. and Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 548 of 2023

The National Company Law Appellate Tribunal ('NCLAT') Delhi, comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member) held that non-grant of any reliefs and concessions by NCLT does not have any adverse effect on the validity of the Resolution Plan and is not a violation of the law. The Bench emphasized that the Successful Resolution Applicant is obligated to implement the Resolution Plan, irrespective of whether specific reliefs and concessions are granted or not. It rejected the argument that the non-approval of certain reliefs and concessions within the Resolution Plan, the Resolution Plan cannot be approved and should be sent back to the CoC.

NCLAT Delhi: Personal And Corporate Guarantors Have No Right Of Subrogation After Approval Of Resolution Plan

Case Title: Jaiprakash Associates Ltd. vs. Jaypee Infratech Ltd. and Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 548 of 2023 & I.A. No. 2643, 3702 of 2023

The National Company Law Appellate Tribunal ('NCLAT') Delhi, comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member) held that the personal guarantors and corporate guarantors have no right of subrogation after the approval of the Resolution Plan under IBC.

NCLAT Delhi: Section 29A(C) Disqualifies Those Managing And Controlling Corporate Debtor Who Failed To Clear Debts

Case Title: Navayuga Engineering Company Ltd. vs. Mr. Umesh Garg RP of Athena Demwe Power Ltd. and Ors.

Case No.: Company Appeal (AT) (Insolvency) No. 783 of 2023

The National Company Law Appellate Tribunal ('NCLAT') New Delhi, comprising Mr. Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that Section 29A(c) of IBC disqualifies not only those in management and control of the Corporate Debtor when its account was declared Non-Performing Asset ('NPA') but also those in management and control of the Corporate Debtor in close proximity of time before the Resolution Plan was submitted, who failed to clear the debts of the Corporate Debtor.

NCLAT Delhi: Resolution Professional Is An Aggrieved Person If NCLT Overturns His Decision

Case Title: Devendra Singh Vs. Homebuyers of Sidhartha Buildhome Pvt. Ltd. & Ors.

Case No.: Company Appeal (AT) (Ins.) No. 791 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), held that the Resolution Professional is an aggrieved party when the decision of the National Company Law Tribunal (“NCLT”) directly overturns his decision.

Whether The Vote Of Each Homebuyer Is Required During The Voting On CIRP Withdrawal Resolutions? NCLAT Clarifies S 12A of IBC

Case Title: Vijay Saini vs Devender Singh & Ors.

Case No.: Company Appeal (AT) (Ins.) No. 1194, 791 & 982 of 2023

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), held that for voting on Corporate Insolvency Resolution Process (CIRP) withdrawals under Section 12A of IBC, the vote of each homebuyer must be counted individually, rather than as a collective class of financial creditors.

Section 12A stipulates statutory provisions governing “withdrawal of application admitted under section 7, 9 or 10”. It states, “The Adjudicating Authority may allow the withdrawal of application admitted under section 7 or section 9 or section 10, on an application made by the applicant with the approval of ninety per cent. voting share of the committee of creditors, in such manner as may be specified.”

NCLAT Delhi: Trademark Hypothecated For Higher Amount And Assignment For Lower Amount Can't Be Sole Criteria To Treat It As 'Undervalued Transaction'

Case Title: Gloster Cables Ltd. vs. Fort Gloster Industries Ltd. and Ors.

Case No.: Comp. App (AT) (Ins) No. 1343 of 2019

The National Company Law Appellate Tribunal ('NCLAT') New Delhi, comprising Mr. Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member) held that the mere fact that the trademark was hypothecated for a higher amount and subsequently assigned for a lower amount would not be the sole criteria for deeming it an undervalued transaction.

IBBI

IBBI Amends CIRP Regulations W.E.F. 15th February 2024

Ref. No. IBBI/2023-24/GN/REG113

The Insolvency and Bankruptcy Board of India (“IBBI”) has issued a notification dated 15.02.2024, whereby amendments have been made to the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP Regulations”). The key amendments are:

• Operating separate bank accounts for real estate projects: To ensure financial transparency and accountability, the amendment makes it mandatory to have a separate bank account for each real estate project under a corporate debtor.
• Monthly meetings of the committee of creditors (CoC): Under the amended dispensation, the resolution professional (RP) is mandated to convene a CoC meeting at least once in every thirty days, with a provision to extend the interval between meetings to a maximum of one meeting per quarter, if CoC so decides.
• Voting procedures: In place of provision of minimum period specified for the opening of the voting window with no upper limit, the amended regulation empowers the CoC to decide the period of opening of electronic voting window with a minimum of twenty-four hours and a maximum of seven days with further increments of twenty-four hours each. Further, to streamline the voting process, the amendment mandates that where the matters listed for voting have already received requisite majority vote, the RP shall provide one last opportunity to vote by extending the voting window by a maximum period of twenty-four hours.
• Approval of insolvency resolution process costs: With a view to enhance the oversight of the CoC over going concern costs, the amendment provides that the RP to seek approval from the CoC for all costs including going concern costs related to the insolvency resolution process.
• Disclosure of valuation methodology: With an aim to increase transparency and reduce disputes over valuation related issues, the amendment provide for explaining the valuation methodology to the members of the CoC before the computation of estimates.
• Disclosure of fair value in the information memorandum: For fostering informed participation in the process, the amendment provides that the fair value may be made part of the information memorandum (IM). However, the CoC, after recording the reasons, can decide not to share such an information where in it's considered view such a disclosure is not beneficial for the resolution.
• Flexibility in inviting resolution plans in real-estate cases: With a view that each project in a real estate case may need different treatment in terms of resolution, the amendment clarifies that after due examination, the CoC may direct the RP to invite separate plan for each project.
• Monitoring committee for implementation of resolution plan: The amendment enables the CoC to decide for constitution of a monitoring committee for overseeing the implementation of the resolution plan. The committee may include the RP, any other insolvency professional or any other person as its member. In case the RP is made part of the committee, the monthly fee payable to him shall not exceed the monthly fee received by him during the corporate insolvency resolution process.
• Continuation of the resolution process pending extension application: A clarification has been provided to ensure that RP continues to discharge his responsibilities under the resolution process till an application for extension is being decided by the Adjudicating Authority