Unsuccessful resolution applicant has no right to question implementation of approved resolution plan

Once a resolution applicant is out of the fray to acquire a corporate debtor in an insolvency proceeding, the unsuccessful resolution applicant has no locus to question any action of any of the stakeholders with regards to implementation of the approved resolution plan.

An order to this effect was passed by the National Company Appellate Tribunal (NCLAT) recently in a petition filed by Hindustan Oil Exploration Company, an unsuccessful resolution applicant in the insolvency case of JEKPL Pvt Ltd. The bid for the corporate debtor was successfully won by Atyant Capital India Fund, a Florida, US-based, India-focused fund.

Dismissing the petition filed by Hindustan Oil Exploration Company, the appellate tribunal maintained that an unsuccessful resolution applicant cannot claim any prejudice on the pretext that any of the actions post-approval of the resolution plan of successful resolution applicant has any effect on its prospects of being a successful resolution applicant.

Hindustan Oil Exploration had moved NCLAT against the National Company Law Tribunal’s 4 February 2020 order approving the resolution application of Atyant Capital India Fund. The appellants argued in its petition that the erstwhile Committee of Creditors (CoC) of the corporate debtor, in connivance with the successful resolution applicant, accepted a re-negotiated fresh resolution plan.

It submitted before the NCLAT that the as per the resolution plan approved by the NCLT the successful resolution applicant (Atyant Capital India Fund) had to bring in Rs.123 crore for resolution within 30 days of approval of the plan. However, the successful resolution applicant did not implement the resolution plan, and yet the CoC accepted a fresh resolution plan to the detriment of the legal rights of the appellant whose resolution plan was rejected on the ground that it could not provide for lump sum time bound payment within 30 days of the approval of its resolution plan.

However, the NCLAT dismissed the appellant’s submission by arguing that if the terms of the approved resolution plan have been changed or the time has been extended to facilitate its implementation, and the creditors have not claimed any prejudice on that count and the CoC comprising of the creditors as stakeholders has not objected to same, then the appellant cannot cry foul. “It is not a case of alleged material irregularity in the Corporate Insolvency Resolution Process, which is in final stages with the approved resolution plan being under implementation,” concluded the NCLAT.