CIRP - Validity of resolution plan - Nil Payment to Operational ...
Insolvency and Bankruptcy
April 30, 2024
CIRP - Validity of resolution plan - Nil Payment to Operational Creditors - waterfall mechanism - The Appellate Tribunal acknowledged the appellants' contention that fairness and equity should be ensured in the distribution of funds, including payment to operational creditors. However, it held that since the liquidation value of the corporate debtor was NIL, and the amount distributed to the corporate debtor under the resolution plan would also be NIL, the plan did not violate Section 30(2)(b) of the IBC. The Tribunal upheld the commercial wisdom of the CoC in approving the resolution plan. It cited established legal precedents that the CoC's decision is beyond judicial review, especially when it does not contravene any provisions of the law. The Tribunal found no error in the impugned order and dismissed the appeal.
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