While maintaining that the resolution applicant cannot modify or withdraw its resolution plan approved by the committee of creditors (CoC) under the Insolvency and Bankruptcy Code (IBC), the Supreme Court has asked National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) to complete the corporate insolvency resolution process (CIRP) within the deadline of 330 days.
A bench headed by justice DY Chandrachud says that the 330 days deadline for the resolution plan has to be strictly adhered to and NCLT and NCLAT must decide IBC matters keeping in mind the sanctity of the deadline provided by the legislature.
Further, once the CoC submits a resolution plan for stressed assets under the IBC, it cannot be modified or withdrawn by the resolution applicant, the bench added.
The apex court was hearing the case of Ebix Singapore PTE against CoC of Educomp Solutions, the debt-ridden digital education company. Last year in July, NCLAT had set aside an order passed by the Delhi bench of NCLT that allowed Ebix Singapore to withdraw its resolution plan for Educomp Solutions after being selected by the 75.36% members of the CoC. This was challenged by the Singapore company in the apex court.
In its order, the bench headed by justice Chandrachud says, "Judicial delay was the reason why the earlier insolvency regime failed, and we cannot let the same happen with the current insolvency regime which came into being after the IBC. Once the committee of creditors submits a resolution plan for stressed assets under IBC, it cannot be modified or withdrawn by resolution applicant."
On 30 May 2017, the NCLT had ordered the commencement of the resolution process under the IBC.
In its report, the company's auditor Haribhakti & Co LLP had highlighted the impairment of investments worth around Rs1,400 crore in four of Educomp's subsidiaries.
"The company has evaluated the carrying value of these investments using business valuations performance by its own assessment, according to which the management is of the opinion that no provision for impairment is considered necessary in respect of these investments," says the audited stand-alone financial results of the company for the year ended on 31 March 2017.
"However, in the absence of appropriate audit evidence… We are unable to comment upon the appropriateness of carrying amount of these investments and the possible impact of the same on loss for the year ended March 2017 and investments...," the report sent to the Bombay Stock Exchange (BSE) on 24 January 2018, says.
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