TMI Blog2019 (4) TMI 1607X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. The reasons given by the CoCs for rejection of Resolution Plan may not be looking plausible on the face of it. But, the reasons are justifiable, which point out towards commercial un-viability and uncertainties of the Resolution Plan submitted by the Applicant. CoCs while rejecting or accepting the Resolution Plan is under obligation to strike a balance between the interests of the creditors and Corporate Debtor. Resolution Applicant or the promoters of the Corporate Debtor cannot thrust their will on the creditors, who have already been pushed to odd position with regard to the recovery of their legitimate dues, which have been advanced to the Corporate Debtor in the shape of credit against the consideration for the time value of mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Corporate Debtor can be permitted if a Resolution Plan is rejected for reasons extraneous to the scheme of the IBC. 2. Having raised the above stated issue along with some other issues, the Applicant has stated in the Application that it has submitted a Resolution Plan before the CoCs which has been rejected on the grounds as follows: - a. Significant haircut that the creditors would be subject to, if the Resolution Plan is accepted; b. Offer materially lower than the one time settlement offer made by the company in 2016; c. Concerns about significant provisions and write offs made in the Provisional Financial Statements of March 31st, 2017 resulting in low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the company, and only thereafter arrive at any decision to reject or accept the Resolution Plan, based on a suitable and rigorous feasibility and viability analysis. 5. The Applicant further contends that it has proposed to infuse money in excess of ₹ 100 Crores to run the Corporate Debtor and thereby increasing the possibility of the contingent payments being realized, but the Resolution of the CoCs dated 01.08.2018 to proceed for liquidation of the Corporate Debtor does not even advert to, much less discuss the feasibility or viability of the Resolution Plan clearly indicates that the Application is filed on the basis of reasons which are contrary to the scheme of the Act i.e., to gear towards resolution and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge status, and prayed to dismiss the Application. 7. The perusal of the reasons stated by the CoCs for rejection of the Resolution Plan of the Applicant show that there has been significant haircut to which the creditors would be subject to, offer was materially lower than the OTS offer made in 2016, and much concern is about the preferential payments, potentially undervalued transactions and transactions that could have been made to potentially defraud creditors. The reasons given by the CoCs for rejection of Resolution Plan may not be looking plausible on the face of it. But, the reasons are justifiable, which point out towards commercial un-viability and uncertainties of the Resolution Plan submitted by the Applicant. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject matter expressed by them after due deliberations in the CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to challenge the commercial wisdom of the individual financial creditors or their collective decision before the adjudicating authority. That is made non justiciable. The Hon'ble Supreme Court has further observed as follows: - 61 .non-recording of reasons for approving or rejecting the resolution plan by the concerned financial c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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