11 January 2022
Matter: IDBI Bank Limited and Ors v. V. Venkata Sivakumar and Ors.
Order dated: 17 November 2021
Summary:
Application was preferred by IDBI Bank Ltd. and Ors., being secured creditors (Applicants) in relation to Jeypore Sugar Company Ltd. (Jeypore Sugar), the corporate debtor seeking relief before NCLT. The Applicants averred that the liquidator of the corporate debtor obtained valuation of assets in an irregular manner and excluded certain assets, thereby failing to maximize the value of assets of the corporate debtor.
Applicants had a claim of INR 567 crores against the corporate debtor and were members of the committee of creditors holding a total voting share of 98.68% (ninety eight point six eight percent). Pursuant to the liquidation of the corporate debtor, the liquidator of the corporate debtor sought an invitation for proposing a scheme for compromise or arrangement under the Act to submit resolution plans. A fresh valuation report was submitted demonstrating a drastic reduction in liquidation value from INR 332 crores to INR 223 crores. The fresh report failed to explain the reason for the drastic reduction while a prime asset/property was accepted at zero valuation since it was a part of a pending litigation.
The NCLT held that assets which are subject to the determination of ownership by the court or authority would form part of the liquidation estate. The liquidator was directed to conduct fresh valuation of the assets of the corporate debtor including the prime asset and to invite schemes from prospective scheme proponents.
For further information, please contact:
Souvik Ganguly, Partner, Acuity Law
al@acuitylaw.co.in
