Derides Corporate Debtor’s suspended Director for pressing upon access to confidential documents- IB Code

Published in news-legal August 13 2018 0
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NCLT disposes of an application filed by one of the suspended Directors (‘Applicant’) of Ruchi Soya Industries Ltd. (‘Corporate Debtor’), seeking that the Committee of Creditors’ (‘CoC’) decision of disallowing him from participation in CoC meetings be set aside;
Takes note of Applicant’s contention that he, being a suspended Director, did not only have the right to participate in the CoC meetings, but also had the right to receive all the documents (including confidential ones and resolution plans) tendered before the CoC, which are pertinent to the CIRP; On perusal of relevant provisions of the Insolvency and Bankruptcy Code, 2016 (‘the Code’) and the Regulations made thereunder, draws out a distinction between ‘Participants’ and ‘Members’ under the Code, and the information (including confidential documents) pertaining to the CoC meetings and insolvency process to be disclosed to them; Rejects Applicant’s contention that since he had already submitted a confidentiality undertaking to the RP, he must be allowed access to all the resolution plans as well as commercial information so as to have a meaningful participation in the CoC meetings; Derides the Applicant by stating that, “if these kind of applications are entertained, it is difficult for the RPs as well as CoC to complete the process within the time lines given under the Code”, distinguishes Applicant’s reliance on NCLAT judgments in “Rajputana Properties and ANG Industries” in this regard: Mumbai NCLT

1. Sec. 24 of the Code entitles the suspended Board of Directors to receive notice of each meeting of CoC. Reg. 21 of the CIRP Regulations provides for the contents of notice of meeting, and mandates provision of copies of all documents relevant to the matters to be discussed and issues to be voted upon in the CoC meeting, to all the ‘participants’.
2. Under the Code, “participant” means a person entitled to attend a meeting of the CoC u/s 24 or any other person authorized by the CoC to attend the meeting.
3. As per Reg. 35, after the receipt of resolution plans, the RP shall provide fair value and liquidation value only to every member of the CoC, on receiving an undertaking from the member to the effect that such member shall maintain confidentiality about these values.
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