The National Company Law Tribunal (NCLT) in Mumbai issued a decision restoring the Corporate Insolvency Resolution Process (CIRP), which was upheld by the Principal Bench of the National Company Law Appellate Tribunal (NCLAT) in New Delhi. The case started when the appellant’s Performance Bank Guarantee (PBG) was invoked because it failed to carry out the resolution plan within the allotted period.
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In an appeal, Darwin Platform Infrastructure Ltd. contested the earlier ruling from the NCLT, Mumbai, dated September 6, 2024, which denied its application and granted the Union Bank of India’s. The case stems from Lavasa Corporation Limited’s insolvency procedure, which was accepted into the Corporate Insolvency Resolution Process (CIRP) in 2018.
The appellant filed their resolution plan in 2021, and it was accepted by the committee of creditors with a 96.41% vote share. In December 2021, the Adjudicating Authority also issued an order approving the plan. Following that, the appellant developed a Performance Bank Guarantee (PBG) as part of the resolution plan requirement. The resolution plan was ultimately approved in 2023 after the appellant produced some later addenda.
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Even though the resolution was approved, there were several issues with its implementation, and State Bank of India (SBI) and Union Bank of India (UBI) applied to the adjudicating body to have the approval decision revoked. Although the authority denied the identical application, questions were raised about the appellant’s capacity to meet the financial commitments outlined in the resolution plan. The established Monitoring Committee noted that the appellant had neglected to pay the Rs 100 crore upfront that was due on the effective date.
At the Joint Lenders Meeting (JLM) on April 6, 2024, it was unanimously decided that the appellant had not carried out the resolution plan within the predetermined timeframes. As a result, UBI also used PBG to claim that the resolution plan was not being followed.
As a result, the appellant submitted a challenge to the PBG’s invocation and a request to move on with the settlement plan, while the creditors submitted a request to start the CIRP. In its ruling, the NCLT reinstated the CIRP by rejecting the appellant’s application and granting the UBI’s application. Before the NCLAT, the appellant contested this order.
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The Appellant failed to implement the Resolution Plan and was unable to infuse the necessary amount of Rs 100 crore within 90 days of the effective date, according to the National Company Law Appellate Tribunal, which dismissed the appellant’s appeal and upheld the National Company Law Tribunal, Mumbai’s decision. Additionally, the tribunal determined that the Performance Bank Guarantee (PBG) invocation was appropriate and supported by the Joint Lenders Meeting’s (JLM) majority ruling.
The Tribunal further emphasized the need for the CIRP process to be implemented on time, adding that the SRA and everyone else must adhere to the CIRP process timeframe and that IBC must be finished on time.
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The court concluded that the invocation of the PBG was affirmed as legally justifiable and dismissed the appeal for not adhering to the settlement plan. With the reinstatement of the CIRP, creditors were able to investigate new avenues for resolution.
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