IRP/ RP

Insolvency and Banking Code, 2016 - The IRP after collation of Claims and formation of ‘Committee of Creditors’ was not entitled to suo-moto review or change the status of a creditor from  Financial to Operational Creditor - Updating list and review are different acts -   If Resolution Professional was aggrieved, he should have moved the  Adjudicating Authority - The aggrieved person can challenge either  constitution of ‘Committee of Creditors’ or for any grievance against rejection,  incorrect acceptance or categorisation of creditors before the Adjudicating  Authority -  But the Resolution Professional cannot arbitrarily on its own  overturn earlier decision, to change the status of a creditor from Financial Creditor to Operational Creditor. Read Judgment here

Insolvency and Banking Code, 2016, Section 5(7), 5(20) - ‘Committee of Creditors’ had no role in deciding the status of a creditor either as ‘Financial’ or ‘Operational’ Creditor and such a decision of ‘Committee of Creditors’ can never be treated as an exercise under its Commercial wisdom - It is a matter of applying the law of I&B Code, and if such factor is left to CoC, there would be a serious conflict of interest - Whether a person or entity is “Financial Creditor” as defined in Section 5(7) or Operational Creditor as defined in Section 5(20) is a matter of applying the law to facts - It cannot be a matter of voting, and choice as discretion is not relevant - During the CIRP, the IRP collates the Claim, and after that, the ‘Committee of Creditors’ is formed under Section 18 of the Code - After the formation of the ‘Committee of Creditors’, only the aggrieved person can agitate the same and that too, only before the Adjudicating Authority - Committee of Creditors was not empowered to adjudicate the issue that has cropped up in the present case, i.e. wheter X is a ‘Financial’ or ‘Operational’ Creditor - Such adjudication is beyond the scope of consideration of the Committee of Creditors. Read Judgment here 

Communications to be made electronically

IBC – Communications - The provisions of IBC, 2016 are clear that the communications during CIRP be made electronically - Further, we note that the NCD holders forming class of financial creditors are of a huge number and the conduct of physical proceedings is not easy process considering the practicality of the same and that IBC is a time bound process - However, the learned RP took all the possible endeavour to conduct physical meeting of COC in Kerala where majority of the members resided only to learn that the NCD holders are not interested to pursue the matter of CIRP including the payment of any CIRP costs and the fees of the RP and the AR - The provisions of IBC, 2016 are clear that the communications during CIRP be made electronically - This case of CD involves huge amount of money which are part of crime and the matter is being contested at different levels of various judicial forums including SEBI which has taken up the matter extensively considering the grievances of the high number of NCD - Lliquidation application of the CD is pending to be heard before this Tribunal and at this stage it is not equitable to allow the prayers of the applicants who only form a miniscule percentage in the COC themselves - The applicants could have very well raised and sorted their concerns before the RP and AR themselves rather than approach this Tribunal at this stage – Application dismissed

read HERE