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Secured or unsecured, financial or operational creditors can’t be treated at par; wisdom of CoC is supreme: SC

July 17, 2020[2019] 111 taxmann.com 234 (SC)
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IBC : Role of resolution professional is not adjudicatory but administrative

IBC : Prospective resolution applicant has a right to receive complete information as to corporate debtor, debts owed by it, and its activities as a going concern

IBC : Rationale for handling affairs of corporate debtor and resolving them only by financial creditors is for reasons that has been deliberated upon by BLRC Report of 2015, which formed basis for enactment of Insolvency Code

IBC : When it comes to a resolution plan being adjudicated upon by Adjudicating Authority i.e., NCLT, residual jurisdiction of NCLT under section 60(5)(c) cannot, in any manner, whittle down section 31(1)

IBC : To ensure that corporate debtor keeps operating as a going concern during insolvency resolution process, past and present payments are to be made to various operational creditors

IBC : Power of Committee of Creditors to approve a resolution plan cannot be delegated to any other body

IBC: That part of resolution plan which states that claims of guarantor on account of subrogation shall be extinguished, can be applied to guarantees furnished by erstwhile directors of corporate debtor

IBC : Claims that may exist apart from those decided on merits by resolution professional and by Adjudicating Authority/Appellate Tribunal cannot be left undecided

IBC : If resolution applicant and Committee of Creditors consented that profits made during corporate insolvency process would not go towards payment of debts of any creditor, NCLAT was incorrect in ordering its utilisation to pay off creditors

IBC : Under newly added proviso to section 12 which is amended by section 4 of Amending Act, 2019, if, by reason of all time taken in legal proceedings, grace period of 90 days from date of commencement of Amending Act of 2019 is exceeded, a discretion can be exercised by Adjudicating Authority and/or Appellate Tribunal to extend time further

IBC : There is no residual equity jurisdiction in Adjudicating Authority or Appellate Tribunal to interfere in merits of a business decision taken by requisite majority of Committee of Creditors; though a certain minimum figure may be paid to different classes of operational and financial creditors it will still be commercial wisdom of Committee of Creditors to determine what amounts are to be paid to different classes

IBC : Code does not treat unequals equally; equitable treatment is to be accorded to each creditor depending upon class to which it belongs, whether secured or unsecured and financial or operational

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