Earlier, IDBI Bank had moved the NCLAT against the 2019 order of the Hyderabad bench of the NCLT, which had dismissed the appeal of private sector lender and state-owned Indian Overseas Bank, comprising Srei Multiple Asset Investment Trust. resolution plans were announced.
The Hyderabad Bench of the National Company Law Tribunal had approved a resolution plan for debt-ridden Deccan Chronicle Holdings presented by Shrey Multiple Asset Investment Trust (Vision India Fund).
The National Company Law Appellate Tribunal (NCLAT) has set aside an order of the Hyderabad Bench of the National Company Law Tribunal (NCLT), which sought a resolution plan for debt-ridden Deccan Chronicle Holdings submitted by Shrey Multiple Asset Investment Trust (Vision). was approved. India Fund).
Earlier, IDBI Bank had moved the NCLAT against the 2019 order of the Hyderabad bench of the NCLT, which had dismissed the appeal of private sector lender and state-owned Indian Overseas Bank, dated December 11, 2018. An appeal was made to announce the resolution plan of Shrey Multiple Asset Investment Trust. It was “discriminatory” and “contrary” to the Insolvency and Bankruptcy Code (IBC) and applicable law.
In an order passed on May 9, 2019, the NCLT had dismissed the appeals of the two banks, observing that “it cannot be said that the transfer of shares (among financial creditors to Deccan Chronicle Holdings) from the Resolution Fund” There is discrimination in allocation”. The Tribunal approved the resolution plan on June 3, 2019, which was approved by the members of the Committee of Creditors (CoC) having 81.39% voting share.
“We believe that there has been discrimination in the allocation of resolution funds. Thus, approval of the resolution plan by the CoC and subsequent approval of the resolution plan by the adjudicating authority vide order dated 03.06.2019 is not sustainable in law. The appellant was not required to challenge the subsequent order dated 03.06.2019.
Thus, the impugned order as well as the order dated 03.06.2019 stands set aside,” said the two-member NCLAT bench of Jarat Kumar Jain and Ashok Kumar Mishra in the order passed on January 21.
The appellate tribunal said, “The matter has been referred back to the CoC with a direction to disburse the settlement amount in accordance with Section 30(4) r/w regulation 38 of the IBBI (Insolvency Resolution Procedure for Corporate Persons) Regulations, 2016. ” Said in the order.
IDBI Bank’s counsel submitted before the NCLAT that the corporate debtor and its promoters through hypothecation deed created special protection on the trademark in favor of the bank. “Clause 2.8 of the Resolution Plan provides that the security interest created by a third party (including the former promoter) shall not lapse under the Scheme.
However, section 4.3 seeks to quash the protection created on the trademark by the corporate debtor and ex-promoters in favor of the appellant. A resolution plan may contain provisions with respect to the assets and liabilities of the corporate debtor only and not other third persons. Therefore, section 4.3 is illegal and needs to be removed,” argued the counsel.
The counsel also submitted that “the scheme has arbitrarily classified financial creditors into categories A and B. The plan categorizes certain Category A financial creditors as well as Category B, which levy charges on assets that are not deemed critical to run acceptably. Corporate Debtors as an ongoing concern.
Contrary to all logic and reason, other than what they are entitled to as Category A of financial creditors i.e. participation in cash payments to be made to financial creditors in the prescribed amount and the right to receive certain equity as prescribed in the scheme, all such financial creditors Creditors who are Category B and hold protections on admittedly non-critical assets have been granted benefits higher than those proposed for Category A. In addition to their eligibility as Category A and B financial creditors also get to retain the benefits of assets exclusively secured in their favor”.
According to the copy of the NCLAT order, as per the resolution plan, the cash advance to financial creditors is Rs 350 crore and the amount to be given to the appellant (IDBI Bank) is Rs 13.5 crore, which covers only 4.11%. Reconciliation Total cash advance settlement amount offered by the applicant.