Tribunal Dismisses Application for Disclosure of Resolution Plan by Related Party Creditor
In a significant ruling, the National Company Law Tribunal (NCLT) Chandigarh Bench has reaffirmed the confidentiality of resolution plans under the Insolvency and Bankruptcy Code, 2016 (IBC), dismissing an application filed by Mr. Rajeev Bhambri, Resolution Professional of Future Colonizers & Construction Limited. The application sought the disclosure of a resolution plan concerning Chandigarh Overseas Private Limited, a corporate debtor undergoing Corporate Insolvency Resolution Process (CIRP).
The application was filed under the contention that the applicant, classified as an "Other Creditor - Related Party," had a substantial financial claim against the corporate debtor, warranting access to the resolution plan to understand the treatment of its claim. The applicant argued that such disclosure was crucial for the CIRP proceedings of the applicant itself, as it was undergoing its own insolvency process.
The Tribunal, comprising Mr. Khetrabasi Biswal and Mr. Shishir Agarwal, rejected the application, emphasizing the statutory scheme under the IBC that ensures the confidentiality of resolution plans until their approval by the adjudicating authority. The Tribunal noted that the applicant's claim had been rightly classified as an "Other Creditor - Related Party," and thus, it was not entitled to receive copies or extracts of the resolution plan prior to its approval.
In its order, the Tribunal highlighted that the IBC and CIRP Regulations restrict access to resolution plans to members and participants of the Committee of Creditors (CoC) only. The applicant, being neither a member of the CoC nor a participant, could not claim a right to access the resolution plan before its approval.
The Tribunal further cited precedents from the Hon'ble National Company Law Appellate Tribunal (NCLAT) and other benches, reinforcing that until a resolution plan is approved under Section 31 of the Code, it remains a confidential document. The judgment also clarified that while operational creditors could raise objections to the resolution plan during its consideration by the adjudicating authority, they are not entitled to pre-approval disclosures.
This decision underscores the judiciary's commitment to maintaining the integrity and confidentiality of the insolvency resolution process, providing clarity on the rights of creditors, particularly those classified as related parties, within the framework of the IBC.
Bottom line:-
Confidentiality of Resolution Plans under the Insolvency and Bankruptcy Code, 2016 - Operational Creditors, including "Other Creditor - Related Party," are not entitled to access the Resolution Plan or its extracts prior to its approval by the Adjudicating Authority.
Statutory provision(s): Sections 24, 31, 60(5) of the Insolvency and Bankruptcy Code, 2016
Rajeev Bhambri v. Mohit Chawla, (NCLT)(Chandigarh Bench) : Law Finder Doc id # 2945338
