Settling cases post admission when there is no Creditors Committee

A unique case, which has yet again landed up before Judicial Member MK Shrawat of the NCLT Mumbai Bench, has tested a new element of settlement post-admission under the Insolvency and Bankruptcy Code (IBC)..In the last one year, there have been several insolvency cases settled not only by the Supreme Court but by the tribunals as well..While this was frowned upon for more than one reason, the IBC Committee report suggested that the settlement of cases be allowed even after it has been admitted if, 90% of the creditors agree with it..This recommendations soon found a place in the latest IBC (Amendment) Ordinance 2018..But this time the Mumbai Bench was posed with a question which even the said Ordinance hadn’t envisaged – what happens when there is no committee of creditors to give its consent for settlement?.While claims were received by the resolution professional of insolvent Geo API Solution Pvt Ltd, none of them landed in the final list of admitted claims for several reasons..Meanwhile, the operational creditor that had triggered the insolvency, HGS India Ltd, reached a one-time settlement with the corporate debtor, Geo API. During the course of the insolvency process, the account of Geo API was frozen for any debits..The resolution professional thus approached the NCLT for settling the matter in view of the peculiar circumstances..The NCLT has now ordered de-freezing of the said accounts and has recused the resolution professional from taking any further action in relation to Geo API..The NCLT has also said that upon payment of the balance amount based on the one-time settlement to HGS, Geo API will be relieved from the insolvency resolution process..HGS India was represented by A&P Partners led by Partner Ankita Singh..(Read the order)