TIMELINES IN RESOLUTION PLAN RELAXED BY NCLT
ON ACCOUNT OF COVID-19
Sunil Kumar Agarwal, RP of DIGJAM Ltd.
Suspended Board of Directors of DIGJAM Ltd.
(C.P. (I.B) No.594/NCLT/AHM/2018)
Order dated May 27, 2020
Hon’ble Coram: Hon’ble Ms. Manorama Kumari, Member Judicial
1. Issue in Consideration:
Whether modification/concession/relaxation in respect of timeline of payment to the creditors and/or stakeholders in resolution plan due to COVID-19 pandemic be allowed?
2. Brief Facts of the Case:
The resolution applicant in this case is “Finquest Financial Solutions Pvt. Ltd”., whose plan for DIGJAM Ltd.(Corporate Debtor) has been approved by the COC with unanimous majority voting share of 100%. Pursuant to the approval of resolution plan by the COC, it was applied to the Adjudicating Authority by the Resolution Professional for the approval of the resolution plan.
During the pendency of the application, the Resolution Applicant filed an affidavit seeking for certain revision/modification/relaxation in the Resolution Plan in respect of time frame for payment to Financial Creditors/Operational Creditors/other stakeholders due to the financial difficulties arising out of current pandemic situation of Covid – 19 virus and consequent lockdown.
The Adjudicating authority had directed the Resolution professional to approach the COC for the aforementioned relaxation. UCO Bank with a majority voting share of 83.31% had accepted the relaxation in time frame whereas SBI Bank with the remaining voting share had only partially accepted the relaxation in time frame (relaxation of time frame for the second tranch of payment was not accepted).
The Adjudicating Authority found that there is no material change in the Resolution plan save and except modification/concession/relaxation in respect of time line of payment to the creditors and/ or stake holders and the relief sought appears to be genuine and bonafide. Therefore, the Resolution plan has been approved by the adjudicating authority with a modified time frame/timeline.