The bankruptcy appeals tribunal has tossed out promoter C Sivasankaran’s plea against the National Company Law Tribunal (NCLT) order on liquidation of Siva Industries.
“The promoter of the corporate debtor, who is ineligible to submit a resolution plan because of Section 29A of Insolvency and Bankruptcy Code (IBC), is trying to provide a settlement proposal, which is similar to a resolution plan under Section 12A of IBC. In other words, the promoter is trying to restructure the loans granted by the financial creditor on the pretext of a settlement proposal to be given under Section 12A of IBC,” the NCLT had noted in August while ordering liquidation.
In its order in August, the NCLT had also dismissed the lenders’ proposal to withdraw the company from bankruptcy proceedings, and the application filed by resolution professional.
Siva Industries and Holding owes lenders about Rs 5,000 crore.
In the latest move, the bankruptcy appeals tribunal note: “It is pointed out that Section 33 of the IBC enjoins ‘Liquidation of the Corporate Debtor’ if the ‘Adjudicating Authority’ comes to the conclusion that the resolution plan does not satisfy the ingredients of Section 30(2) of the Code.”
While dismissing the appeal, the the bankruptcy appeals tribunal noted that the conclusion arrived at by the insolvency court to direct the company's liquidation was right and needed no interference.
It noted that the insolvency court's order was reasonable and fair keeping in view the statutory provision laid down under Section 33(1)(a) of the IBC.
This provision says that the adjudicating authority - the NCLT - can direct a corporate debtor's liquidation in the event it does not receive a resolution plan within the stipulated timeframe.
The promoter in the case has a legal remedy available to appeal against the appeals tribunal's ruling before the Supreme Court.