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2022 (3) TMI 602 - AT - Insolvency and BankruptcyValidity of approval of Resolution Plan - It is submitted that Adjudicating Authority while approving the Resolution Plan has erroneously directed that Excluded Securities are no longer enforceable as defined under Resolution Plan which direction is contrary to the Resolution Plan. - HELD THAT:- The view which was taken by the Adjudicating Authority both in the Order dated 03.02.2022 approving the Resolution Plan and Clarification Order was that in view of the fact that unpaid debt shall stand converted into non-convertible redeemable preference share hence the excluded securities are no longer enforceable. The Adjudicating Authority held that excluded securities are subsumed under Clause 3.3.(iii). The Adjudicating Authority obviously referred to Paragraph 3.3. (e) (H) which provided that balance Financial Debt forming part of the Admitted Debt shall stand converted into non-convertible redeemable preference shares of the company which shall be issued to the Financial Creditors upon conversion of the unpaid debt. The above provision in the Plan for conversion into non-convertible redeemable preference shares of the balance financial debt has no bearing on specific provisions in the plan by 3.3.(iii)(g) which clearly provided that excluded securities shall not be extinguished or waived under this Resolution Plan. In the clarification Order dated 03.02.2022, the Adjudicating Authority in Paragraph 29 has again observed that excluded securities are subsumed under Clause 3.3(iii)(c )(h) wherein the plan proposed that any balance financial debt forming part of admitted debt shall be converted into non-convertible redeemable preference share, for the reasons which are noticed, the observations in Paragraph 29 of the Clarification Order also cannot be sustained and deserves to be deleted. The observations of the Adjudicating Authority in Paragraph 29 that ‘the approval of the resolution plan ipso facto discharge the enforcement of excluded securities’ is not in accordance with the Resolution Plan and is hereby deleted. Appeal are allowed by deleting the relevant part in Direction 1 of the Impugned Order under the heading ‘Reliefs, Concessions and Dispensations to the extent ‘hence, the excluded securities are no longer enforceable as defined under the resolution plan’.
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