Section 30(4) Of IBC Directory In Nature, Does Not Compel COC To Distribute Payments Based On Value Of Security : NCLT Hyderabad

The National Company Law Tribunal, Hyderabad Bench, comprising of Shri Dr. N. V. Rama Krishna Badarinath and Shri Satya Ranjan Prasad, while adjudicating a petition filed in Stressed Assets Stabilisation Fund, Mumbai vs. M/s. Canara Bank is a Financial Creditor of the Corporate Debtor which holds 28.63% voting share in CoC; has first charge over current assets and second charge over fixed assets of the Corporate Debtor. The Financial Creditor was allotted 12% from the resolution fund alongwith other financial creditors who hold second charge over fixed assets. of voting share of the financial creditors, after considering its feasibility and viability, the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section of section 53, including the priority and value of the security interest of a secured creditor and such other requirements as may be specified by the Board:…xxxx Issue Whether the COC’s decision regarding payment to different classes or sub-classes of creditors under the Resolution Plan can be interfered with, especially on the ground of alleged discrimination among the same class of financial creditors? “Section 30 of the IB Code only says that the COC may take into account the order of priority amongst creditors as laid down in sub-section of Section 53 of the IB Code, including priority and value of security interest of secured creditors, while approving the resolution plan, so much so, the argument that, as the COC failed to take into the account the pre-CIRP preferential financial bargains made by the Applicants with the Corporate Debtor, as such, the impugned decisions are liable to be set aside, is untenable.” The Bench opined that a dissenting secured creditor cannot seek a higher amount to be paid to them, on the basis of the value of their security interest by pleading dissatisfaction.