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NCLAT modifies resolution plan submitted in case of Essar Steels

July 8, 2019[2019] 107 110 (NCLAT- New Delhi)

IBC: 'Committee of Creditors' have not been empowered to decide manner in which distribution is to be made between one or other creditors. 'Financial creditors' being claimants at par with other claimants like other 'financial creditors' and 'operational creditors' having conflict of interest cannot distribute amount amongst themselves that too keeping maximum amount in favour of one or other 'financial creditors' and minimum or 'NIL' amount in favour of some other 'financial creditors' or 'operational creditors'. Members of 'Committee of Creditors' being interested party are also not supposed to decide manner in which distribution is to take place

• Where huge discrimination had been made by 'Committee of Creditors' in distribution of proposed amount to 'operational creditors' qua 'financial creditors' such that majority of financial creditors' had been allowed 99.19 per cent of their claim amount, whereas 'NIL' i.e., 0 per cent in favour of 'operational creditors', NCLAT modified resolution plan submitted by resolution applicant to safeguard rights of operational creditors and other financial creditors.

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