Cosmos Cooperative Bank Ltd. Vs Edelweiss Asset Reconstruction Company Ltd. & Ors. (NCLAT Delhi)
The case of Cosmos Cooperative Bank Ltd. vs. Edelweiss Asset Reconstruction Company Ltd. & Ors. before the National Company Law Tribunal (NCLT) revolves around the resolution process of S.K. Wheels Private Limited under the Insolvency and Bankruptcy Code, 2016 (IBC). The core issue is whether the extension of time granted to the Resolution Applicant for payment constitutes a modification of the resolution plan, leading to liquidation.
The facts are as follows: The Corporate Insolvency Resolution Process (CIRP) was initiated against S.K. Wheels Private Limited, and a resolution plan submitted by Anil Kumar, the Promoter/Director, was approved by the Committee of Creditors (CoC). Subsequently, there were delays in payments by the Resolution Applicant, leading to concerns and requests for liquidation.
The Resolution Professional (RP) filed an application seeking liquidation due to the Resolution Applicant’s alleged failure to adhere to the payment timeline. However, the CoC, in a meeting, decided against liquidation, opting instead to grant further time for payment. This decision was supported by the majority vote, including that of Cosmos Cooperative Bank Ltd., a major Financial Creditor.
Respondent No.1, Edelweiss Asset Reconstruction Company Ltd., dissatisfied with the CoC’s decision, filed an application seeking liquidation, arguing that the decision not to liquidate constituted a modification of the approved resolution plan, which is impermissible under the IBC. The NCLT, in its impugned order, agreed with this argument and directed for liquidation.
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