[Aircel insolvency] Once NCLT approves resolution plan, all claims stand frozen: Madras High Court

The Madras High Court recently said that claims or reliefs that were not a part of the resolution plan under the Insolvency and Bankruptcy Code (IBC) cannot be claimed after the said plan is duly approved by the adjudicating authority [Aircel v. The Union of India]. .In a judgment passed on January 10, Justice Anita Sumanth of the Madras High Court allowed a petition filed by the now insolvent telecom company Aircel that had challenged demand notices raised by the Central government's Department of Telecommunications (DoT) in 2013 for the license granted to the company for the Chennai Metro Circle..The petitioner company had argued that in June 2020, while approving its resolution plan under the IBC, the National Company Law Tribunal (NCLT), Mumbai, had taken note of the DoT's claims. Therefore, any attempt by the DoT to continue claiming dues through previous demand notices must be held as illegal, Aircel argued. Counsel for Aircel further produced documents to show that in its June 2020 order, the NCLT had quantified the claims of its operational creditors including the DoT at a little over ₹2,703 crore. From this amount, ₹27.85 crore was admitted and the amount provided under the plan was ₹25 lakh..The High Court accepted the petitioner's submissions, and said that once a resolution plan had been approved by NCLT under Section 31(1) of the IBC, the claims in the plan become binding on the corporate debtor as well as its employees, members and creditors, including all Central and State government authorities. Therefore, any claim, which is not a part of such resolution plan stands extinguished once the plan is approved, the Court said. The Court further said that no proceedings can either be initiated or continued in respect of a claim, which was not part of the resolution plan."Thus, once the resolution plan stands approved by the NCLT, all claims stand frozen, and no claim, which is not a part of the resolution plan, survives. In the present case, the claim of the respondents has not only been noted, but also has been accepted, in part. Recording the above, this writ petition is closed," the order said..In February 2018, Aircel had itself filed an application under Section 10 of the IBC for initiating the insolvency resolution process after it failed to repay its loans. On June 9, 2020, the NCLT approved a resolution plan for Aircel, submitted by asset reconstruction firm UV ARCL. The claims of Aircel's creditors was quantified at ₹2,703.96 crore, of which ₹27.85 crore was admitted. As part of such plan, the amount due to creditors was "0.01 percent of the amount claimed," its counsel told the High Court. .Advocate Vishnu Mohan appeared for Aircel. Deputy Solicitor General R Rajesh Vivekananthan appeared for the Central government..[Read order]

[Aircel insolvency] Once NCLT approves resolution plan, all claims stand frozen: Madras High Court

Ayesha Arvind

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