‘Creditors can’t alter approved resolution plan’

NEW DELHI: The committee of creditors (CoC) cannot modify or alter a resolution plan for reallocation of funds of dissenting creditors, after it is approved, insolvency appellate tribunal NCLAT has said. Dismissing an appeal by Bank of Baroda in the Reliance Communications Infrastructure (RCIL) matter, NCLAT said the assenting members of the CoC cannot alter the financial layout once the bids have been approved.“It is true that the CoC with commercial wisdom can take a decision regarding different aspects of the plan, including manner of distribution, but once the commercial wisdom has been exercised by approving the resolution plan in meeting, the modification of the said distribution mechanism, which is impermissible, cannot be saved in the name of commercial wisdom of the CoC,” said NCLAT.The NCLT had approved the bid of Reliance Projects & Property Management Services (RPPMS), a Jio subsidiary. This resolution plan was approved by 68% vote share of the CoC on Aug 5, 2021. Bank of Baroda was one of the members of the CoC who approved RPPMS’s plan. However, IDBI Bank, SBI, and some other financial institutions dissented.