Post-Approval Challenge to Valuation and Interest Claims Barred When Not Contested During CIRP
- 2 days ago
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REEDLAW Legal News Network reports: The Appellate Tribunal reaffirmed that operational creditors cannot reopen issues relating to claim determination or valuation after approval of a resolution plan when such matters were duly communicated during the Corporate Insolvency Resolution Process but not challenged in time. The decision underscores the importance of procedural diligence and finality in insolvency proceedings, particularly in ensuring the certainty and stability of approved resolution plans.
The National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justice Ashok Bhushan (Chairperson) and Mr. Indevar Pandey (Technical Member) dismissed the appeal and upheld the approval of the resolution plan, holding that the payout to the operational creditor was compliant with Section 30(2)(b) of the Code. The Tribunal found that the non-admission of the interest component had been communicated by the Resolution Professional and was never challenged, and that the valuation conducted under the CIRP Regulations had attained finality and could not be questioned post-approval.
The Appellate Tribunal considered an appeal filed by an operational creditor challenging the approval of a resolution plan on the grounds of non-admission of interest and alleged undervaluation of the Corporate Debtor. The Appellant contended that only the principal amount of its claim had been admitted and that it was deprived of an opportunity to challenge the exclusion of interest.
The Tribunal noted that the Resolution Professional had duly communicated to the operational creditor that the interest component of its claim was not admitted. However, the Appellant failed to take any steps to challenge this determination during the CIRP. It was further observed that the payout to the operational creditor was in compliance with Section 30(2)(b) of the Insolvency and Bankruptcy Code, ensuring that the statutory minimum entitlement was met.
On the issue of valuation, the Tribunal held that the valuation of the Corporate Debtor is conducted strictly in accordance with the CIRP Regulations, 2016, through prescribed procedures. Once such a valuation is finalised during the CIRP, it attains finality and cannot be reopened at the stage of appeal after approval of the resolution plan.
The Tribunal emphasised the limited scope of judicial review in such matters and held that issues relating to valuation and claim admission, if not timely challenged, cannot be raised subsequently to disturb an approved resolution plan. Finding no infirmity in the impugned order, the appeal was dismissed.
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