Promoter Fails to Project `Resolution Plan’ within Specified Time Limit: NCLAT upholds Dissolution Order [Read Order]
Promoter – Resolution Plan – Specified Time Limit – NCLAT upholds Dissolution Order – NCLAT – Dissolution Order – Promoter Fails to Project – taxscan
Promoter – Resolution Plan – Specified Time Limit – NCLAT upholds Dissolution Order – NCLAT – Dissolution Order – Promoter Fails to Project – taxscan
The National Company Law Appellate Tribunal (NCLAT) upheld the dissolution order of the Corporate Debtor Company Since the promoter fails to project a `resolution plan’ within the specified time limit.
Shyson Thomas, the Appellant / Promoter, is the Managing Director of M/s. Air Pegasus Private Limited, has challenged the impugned order passed by the `Adjudicating Authority’ (`National Company Law Tribunal’, Bengaluru Bench).
The Appellant had sold its Properties, and infused funds from many sources, to keep the Company afloat. However, the `Working Capital’ crunch and `Non-availability of Funds’, had affected the business very badly and added further, the high `Lease Rental Cost’, huge `Advance Security Deposit’, etc., had affected the profitability of the business.
According to the Appellant, when the `Aircraft’, was acquired, the `Lease Costs’ and `Security Deposit’, for the `Aircraft’, were more than twice its actual rate, due to Kingfisher debacles. But, the situation had changed, and there is a drastic reduction in the `Lease Rentals’ and `Aircraft Operators’, needing only the minimal `Security Deposit’.
Because of the pandemic situation, the `Aircraft Suppliers’ are collecting `Lease Rentals’, at a very low rate, which gives an advantage to the `Aircraft Operators’, to have more margin on their `Value’. Because of the increased traffic on roads and increased purchasing power of people in `Tier II’ and `Tier III’ Cities, people are resorting to faster and more efficient means of Travel and there is huge scope for the `Corporate Debtor’, to bounce back and commence its operations.
It was found that there were wide deliberations amongst the members of the CoC while considering the Settlement Plan as submitted by the appellant. Not only that, but the proceedings would also reveal that after suggestions were made by some of the members of the CoC, suitable amendments were carried out in the Settlement Plan by the appellant.
One of the members of the CoC having a voting share of 23.60%, though initially opposed to the Settlement Plant, subsequently decided to support the same. Accordingly, the NCLT itself, vide order dated 29th March 2021, directed the RP to reconvene the CoC meeting. As per the directions of the NCLT, on 1st April 2021, the 17th meeting of the CoC was reconvened, wherein the Settlement Plan was approved by 94.23% votes.
The Authority viewed that the Insolvency Resolution Process under the Insolvency & Bankruptcy Code, 2016, is a `Time Bound Process’, and the `Appellant / Promoter’, having failed to project the `Resolution Plan’, within the specified time limit and later, the 1st Respondent / Resolution Professional is not to accept any Plan.
The the two-member bench of Justice M. Venugopal, Member (Judicial) and Shreesha Merla, Member (Technical) held that “the `impugned order’ passed by the Adjudicating Authority’ (`National Company Law Tribunal’, Bengaluru Bench), in passing an `Order of Dissolution’ of the `Corporate Debtor’ / `Company’ (M/s. Air Pegasus Private Limited), with immediate effect, is free from any `Legal Infirmities’. Resultantly, the `Appeal’ fails. “
To Read the full text of the Order CLICK HERE
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
