Resolution applicant can change nature of business of corporate debtor as long as the objective of IBC isn’t hampered

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  • Last Updated on 23 September, 2021

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Approval of resolution plan Corporate Insolvency Resolution Process

Case details: Next Orbit Ventures Fund v. Print House (India) (P.) Ltd. - [2021] 130 taxmann.com 147 (NCLAT- New Delhi)

Judiciary and Counsel Details

    • Justice Bansi Lal Bhat, ACTG Chairperson, Dr. Ashok Kumar Mishra and Ms. Shreesha Merla, Technical Member.
    • Kumar Anurag Singh, Zain A. Khan, Advs. for the Appellant. 
    • Dinakar Singh, Arpan Behl and Dhrupad Vaghani, for the Respondent.

Facts of the Case

In the instant case, a Resolution Professional of the Corporate Debtor filed an application invoking the provisions of Section 30(6) of the Code read with Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 for approval of the resolution plan in respect of the Corporate Debtor, against whom CIRP has been initiated before the National Company Law Tribunal, Mumbai.

The suspended directors and promoters of the Corporate Debtor filed an application before Adjudicating authority objecting to the approval of resolution plan, on the ground that the Resolution Applicant – ‘Sify Technologies Limited’ intends to change the main business of the ‘Corporate Debtor’ from printing business to running data centers. The said application was dismissed by the Adjudicating Authority.

NCLAT Held

On appeal, the National Company Law Appellate Tribunal held that the Insolvency and Bankruptcy Code provides for the restructuring of the corporate debtor or change in portfolio of goods and services produced/rendered by the corporate debtor as long as scope and objective of code are not hampered. Therefore, if the resolution plan submitted by the successful resolution applicant contemplates a change in nature of the business to another line when the existing business was obsolete or non-viable, it could not be construed that the Resolution plan was not ‘feasible or viable’.

List of Cases Referred to

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