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The National Company Law Tribunal (NCLAT), New Delhi Wednesday set aside an order of the National Company Law Tribunal (NCLT), Mumbai bench which had affirmed the resolution plan of Videocon Group by Vendata's Twin Star Technologies. 

As such, the Principal bench of the appellate authority has remitted the case(s) back to Videocon's Committee of Creditor's (CoC) for purposes of carrying forward the Corporate Insolvency Resolution Process (CIRP) in terms of the Insolvency and Bankruptcy Code (IBC). Court was of the opinion that Section 30(2)(b) of the IBC has not been complied with and that the resolution plan is not in accordance with Section 31.

“Accordingly, the approval of the resolution plan by the CoC as well as adjudicating authority is set aside and the matter is remitted back to CoC for completion of the process relating to CIRP in accordance with the provisions of the Code,” the bench consisting of Justice Jarat Kumar Jain & Dr. Ashok Mishra (Technical Member) said.

The present Judgment came in light of Bank of Maharashtra's appeal against an NCLT order of July 2021 which was appealed in the NCLAT and subsequently set aside.

Twin Star Technologies Ltd.'s resolution plan was approved by the CoC saying that it has certain defects. Thus, the NCLAT has set aside the same, pointing out that it has certain defects such as the payout which was made to the financial creditors not being in compliance with IBC, approval of the resolution plan inspite of the concerns raised around the bid value being close to the liquidation value. Further to this, the court has found that the if the CoC wants to reconsider its approval, it should be allowed to do so.

In terms of section 30(2)(b) of the IBC dissenting financial creditors are required to get an amount which should not be less than the amount paid under waterfall mechanisms in case there is liquidation. However, the dissenting creditors, i.e. Bank of Maharashtra and IDBI and Small Industries Development Bank of India stated that they are being paid less than the liquidation value.

The NCLAT also noted that the Tribunal was not satisfied with the resolution plan and had expressed surprise at the Twin Star's bid, which was close to the liquidation value. Moreover, this was required was to be confidential.