COC decision final on Resolution Plan
In a recently decided matter of IMR Metallurgical Resources AG (Company) Vs. Ferro Alloys Corporation Ltd the National Company Law Tribunal, Cuttack on 25th July, 2020 decided that Adjudicating Authority does not have power to go into evaluation aspects of Resolution Plan as commercial decision of Committee of Creditors is paramount.
In the said matter, the COC had approved the resolution plan submitted by M/s Sterlite Power Transmission Limited which according to the applicant M/s IMR Metallurgical Resources, was unfairly evaluated decision of the Committee of Creditors, as the financial bid of this applicant was superior to the other. Further-more Resolution Plan submitted by the applicant had shown considerable weightage for payment of Operational Creditor’s dues. However, in the plan of M/s Sterlite Power Transmission Limited there is no such allocation of funds. Considering such a decision was contrary to the well accepted objective of the Corporate Insolvency Resolution process i.e. maximisation of the value of the Corporate Debtor an intervening application was filed under section 60(5) of the code.
The Hon’ble Bench after evaluation of the various claims made by both the parties ruled that, the unsuccessful Resolution Applicant herein the applicant was given umpteen opportunities to revise and submit better plan. Rather the Committee of Creditors had also allowed the applicant to submit a plan after the deadline of submission and even evaluated it as per standard procedures. Therefore, it was evident that both the resolution applicants were treated at par by the COC with no biasedness. Further from the records it was clear that the scoring of the successful applicant was more than that of the applicant. Hence, the allegation of that there was error in marking of score by the Committee of Creditors is not correct and not acceptable. Further-more, the evaluation matrix applied was same for both the parties, opportunities to submit revised Resolution Plan was given to both the parties and
both the Resolution Applicants participated in the meetings. Therefore, no discrimination apparently faced by any one party. The bench also stated that the Hon’ble Supreme court have held time and again that the decision of the Committee of Creditors in the approval of the Resolution Plan is paramount and Adjudicating Authority does not have power to go into the evaluation aspects of the Resolution Plan. Considering that both the Resolution Applicants were treated at par and equal opportunities were given to submit the plan/revised the plan and to participate in the meetings. There was no discrimination per se. The decision of the Committee of Creditors to approve the Resolution Plan of the M/s Sterlite Power Transmission Limited is upheld.
Article written by – Binay Singhania, Partner at AAA Insolvency Professionals LLP