Judicial proceedings will decide whether final decision on distribution of proceeds of a resolution plan under the bankruptcy law will be in the hands of committee of creditors said bankruptcy board chairperson, MS Sahoo.
Distribution of proceeds under resolution plans has become a major sticking point in the insolvency proceedings of Essar Steel.
The initial resolution plan approved by the committee of creditors (CoC) provided for no payment to operational creditors with claims over Rs 1 crore while providing over 90% recovery to most financial creditors.
The CoC has since revised the plan to offer Rs 1,000 crore to operational creditors with claims over Rs 1 crore but the plan has not yet been approved by the National Company Law Appellate Tribunal (NCLAT).
“As of now, Supreme Court has told that commercial matters the committee of creditors will decide. Whether this aspect is a commercial aspect or not, we will find out from judicial proceedings” said Sahoo on the sidelines of a conference on the Insolvency and Bankruptcy Code by industry body ASSOCHAM on Saturday.
NCLAT chairperson justice SJ Mukhopadhaya also did not approve of skewed distribution of funds in resolution plans approved by CoC while referring to the Essar Steel case and that operational creditors should be treated in a similar manner to financial creditors.
The Appointments committee cabinet appoint 14 judicial and 18 technical members to the NCLT on Friday. This is expected to bring down the resolution time.
Source : Economic times