Quandary Of Dissenting Financial Creditors Having Security Interest: Perhaps Supreme Court's Larger Bench To Guide Dissenting Financial Creditors
10 months, 2 weeks ago

Quandary Of Dissenting Financial Creditors Having Security Interest: Perhaps Supreme Court's Larger Bench To Guide Dissenting Financial Creditors

Live Law  

The recent judgment by a Two-Judge Bench of the Supreme Court, delivered by Justice Sanjeev Khanna and Justice S.V.N. Therefore, while the DBS Bank judgment cites relevant decisions such as Committee of Creditors of Essar Steel India Limited, Swiss Ribbons, and Vallal RCK, which emphasize the importance of respecting the commercial wisdom of the CoC, it also noted that, while a resolution plan, once accepted, is enforceable and binding on all creditors, Section 30 protects dissenting financial creditors by ensuring they receive a minimum amount not lesser than their entitlement in the event of liquidation. Section 30 forfends the dissenting financial creditor from settling for a lower amount payable under the resolution plan.” More importantly, the DBS Bank judgment casts doubt on the correctness of the India Resurgence ARC judgment, pointing out contradictions in its reasoning and discord with the decisions in Committee of Creditors of Essar Steel India Limited and Jaypee Kensington Boulevard Apartments Welfare Association & Others v. NBCC Limited & Others. The Court expressed reservations on specific paragraphs of the India Resurgence ARC judgment and asserted that dissenting financial creditors are entitled to a minimum value equivalent to the liquidation value of their security interest. In other words, in our opinion, the dissenting financial creditor is entitled to a minimum value in monetary terms equivalent to the value of the security interest.” In conclusion, the DBS Bank judgment finds the current legal position to be in line with protecting the minority autonomy of secured creditors and ensuring dissenting financial creditors to receive at least the minimum entitlement, equivalent to the liquidation value of their security interest.

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History of this topic

Dissenting Financial Creditor Entitled To Liquidation Value Commensurate Only With Security Interest: NCLT Delhi
1 year, 5 months ago

Dissenting Financial Creditor Entitled To Liquidation Value Commensurate Only With Security Interest: NCLT Delhi

Live Law  

The National Company Law Tribunal, Principal Bench, comprising of Chief Justice Ramalingam Sudhakar and Shri Avinash K Srivastava, while adjudicating a petition filed in the matter ofM/s. Ltd.,has held that a co-joint reading of Sections 52, 53 and 30 of IBC reveals that a Dissenting Financial Creditor is at best entitled to the liquidation value commensurate with its security interest. …

Secured Creditor Can't Challenge Resolution Plan Insisting That Higher Amount Should Be Paid Based On Security Interest : Supreme Court
3 years, 6 months ago

Secured Creditor Can't Challenge Resolution Plan Insisting That Higher Amount Should Be Paid Based On Security Interest : Supreme Court

Live Law  

The Supreme Court has held that a dissenting secured creditor cannot challenge a resolution plan approved under the Insolvency and Bankruptcy Code with an argument that higher amount should have been paid to it on the basis of the security interest held by it over the corporate debtor.A division bench comprising Justices Vineet Saran and Dinesh Maheshwari observed that it …

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