The National Company Law Tribunal (NCLT) has turned down the resolution plan put forward by Wadhwa Buildcon LLP’s promoters. The reason cited was the conduct of the Resolution Professional (RP) and the fact that the promoters were already labeled as wilful defaulters.
This decision came after the company’s financial creditor, Bank of India, raised concerns about irregularities in the approval process of the resolution plan.
The Mumbai bench of the bankruptcy court sided with the lender, especially regarding the RP’s actions. It noted a decrease in the voting percentage of financial creditors and a substantial increase in homebuyers’ voting rights during various meetings.
The court observed that the RP’s actions, like delaying the presentation of the resolution plan and adding homebuyers to the committee, were not in the lender’s best interests.
It was also discovered that the company’s promoter, Ankit Wadhwa, had been declared a wilful defaulter before submitting their revised resolution plan. However, the RP didn’t disclose this crucial information to the Committee of Creditors (COC).
The court saw this as a failure on the part of the RP, depriving the COC of making an informed decision. It stressed the importance of Section 29A of the Insolvency and Bankruptcy Code (IBC), which aims to prevent defaulting promoters from participating in the resolution process.
Moreover, there were concerns about the COC’s composition, which seemed to be dominated by homebuyers lacking commercial wisdom and legal expertise.
In light of these issues, the court rejected the promoters’ resolution plan and extended the Corporate Insolvency Resolution Process (CIRP) by 180 days to seek new expressions of interest.
This ruling highlights the need for transparency and fairness in the insolvency resolution process, urging resolution professionals to uphold their duties impartially and ensure compliance with the law.
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