Case Law Details
Section 30(4) of IB Code provides that ‘the committee of creditors may approve a resolution plan by a vote of not less than sixty-six per cent of voting share of the financial creditors, after considering its feasibility and viability the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of Section 53, including the priority and value of the security interest of a secured creditor, and such other requirements as may be specified by the Board‘
Given section 30 (4) of the IB Code, it is clear that the Committee of Creditors may approve a resolution plan with 66% voting share after considering its feasibility and viability. The manner of distribution proposed may take into account the Order of priority amongst creditors as laid down under Section 53 (1) of the Code. But for fixing the Order of priority, the COC has to consider the priority given under Section 53 (1) of the Code. Section 53(1) (a) provides 1st priority for paying Insolvency Resolution Process costs and liquidation costs in full.
The respondent RP has admitted that a Letter of Credit Bank Guarantee has been issued favouring the beneficiary/vendor to purchase various steels and other alloys to keep the CD as a going concern. However, the Respondent RP has failed to appreciate that the Corporate Debtor is liable to pay the suppliers/beneficiaries under the LCs/BG during the CIRP period. The payments consequently may be made to beneficiaries by debiting to the Corporate Debtor’s account have been misconceived as recovery towards Appellant’s dues and thereby caused massive loss to the Appellant / Applicant in denying its claim.
It is pertinent to mention that the approved Resolution Plan of ‘LHG’ had a condition that the Resolution Applicant will provide the cover of an equivalent amount from a scheduled bank in the event it intends to avail Non- Fund Based, LC/BG credit facilities and the same was intimated to the RP on 24 October 2018, which the Resolution Plan failed to fulfil.
Respondent No. 1, in its Reply, had accepted that NFB limits be subject to covering the limits by the Scheduled Commercial Bank, which is in line with the discussions with the Resolution Applicant and has also been mentioned as a part of the Resolution Plan.
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