Financial creditors are placed at a higher priority than operational creditors

Pani Logistics Vs Vikash G Jain RP of Sona Alloys Pvt. Ltd. (NCLT Ahmedabad)

NCLT Ahmedabad held that conjoint reading of Section 30 & Section 53 of IBC shows that the Financial Creditors are placed at a higher priority than Operational Creditors. Hence, as the Financial Creditors have not been paid in full, the Operational Creditors cannot claim a higher amount.

Facts- The present application is filed by M/s. Pani Logistics against Mr. Vi kash G Jain, Resolution Professional and Committee of Creditors of M/s Sona Alloys Private Limited (under CIRP) and M/s MTC Business Private Limited, the Successful Resolution Applicant in the CI RP of M/s. Sona Alloys Private Limited u/s 60(5) r.w Section 31(2) of IBC, 2016 claming to reject the Resolution Plan (Annexure-A1) submitted by the Resolution Applicant (Respondent No.3, MTC Business Pvt. Ltd.) and to direct the Respondent No.1, Resolution Professional to issue Public Announcement for submission of fresh Resolution Plans.

Conclusion- The conjoint reading of Section 30 & Section 53 of IBC shows that the Financial Creditors are placed at a higher priority than Operational Creditors. The Secured Financial Creditors are covered by Section 53(1)(b)(ii), the Unsecured Financial Creditors are covered by Section 53(1)(d). The Operational Creditors are to be considered thereafter having lower priority and are covered by Section 53(1)(f). Since the Financial Creditors have not been paid in full, the Operational Creditors cannot claim a higher amount. No violation of the provisions of the IBC, 2016 and Regulations there under is noticed in the distribution of resolution proceeds to Financial Creditors and Operational Creditors.

FULL TEXT OF THE NCLT JUDGMENT/ORDER

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