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NCLAT clarified that the sale of assets in liquidation under the IBC must strictly adhere to its provisions and regulations, ensuring transparency and maximizing value for creditors and stakeholders.
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench comprising Justice Rakesh Kumar Jain (Judicial Member) and Ajay Das Mehrotra (Technical Member) was hearing appeals and observed that the sale of assets in liquidation under the IBC must strictly adhere to its provisions and regulations, ensuring transparency and maximizing value for creditors and stakeholders.
In a recent NCLAT judgment concerning Lanco Kondapalli Power Ltd., the Liquidator and a Successful Bidder filed applications under the Insolvency and Bankruptcy Code, seeking approvals related to the sale of assets. The Liquidator sought approval to sell the company to Radha Vasavi Assets LLP as a going concern, along with concessions and distribution of sale proceeds. The Successful Bidder sought similar approvals for the sale of its SPV.
Both applications were partly allowed, granting waivers and concessions as per the terms specified. However, the request of the Successful Bidder to fix a four-month timeline for asset removal without conditions was declined. Subsequently, appeals were filed challenging these orders.
Appellant, an Operational Creditor, challenged the order concerning the Successful Bidder's application, asserting that the e-auction process undervalued assets, particularly prime land. They argued the auction lacked transparency and violated the Code's value maximization principles. The appellant's standing to appeal was questioned by Respondents, citing delayed objection and awareness of valuation processes.
Respondents defended the e-auction's integrity, emphasizing compliance with valuation norms and stakeholder consultation. They noted prior awareness and participation of stakeholders, including the appellant through its representative. They contended that objections raised post-sale completion lacked merit.
The NCLAT is set to decide these appeals, considering issues of valuation integrity, stakeholder participation, and the appellant's standing as an aggrieved party under the Code.
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