NCLT Orders Surplus CIRP Profits to Financial Creditors, Aligning with Resolution Plan Terms

In a recent judgment by the National Company Law Tribunal (NCLT) Mumbai, the case of Kalyan Janata Sahakari Bank Ltd. Vs Arun Kapoor addressed a critical aspect of Corporate Insolvency Resolution Process (CIRP) – the allocation of profits. The tribunal’s ruling sheds light on the distribution of profits during the CIRP period, particularly when the Resolution Plan and Request for Resolution Plan (RFRP) are silent on the matter.

Detailed Analysis

The crux of the matter revolved around the utilization of profits accrued during the CIRP period. The Financial Creditors of Cicil Biochem Private Limited, the Corporate Debtor, sought direction regarding the distribution of profits and withdrawal of a letter issued by the Respondent concerning profit utilization. The tribunal examined the facts leading to the application, highlighting the arrangements made during CIRP to reduce costs and maintain the company’s viability.

Please become a Premium member. If you are already a Premium member, login here to access the full content.