Former promoters, directors can submit bids if not disqualified under Section 29A of IBC
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The National Company Law Appellate Tribunal (NCLAT) on Thursday said former promoters and directors of a company undergoing insolvency process will not be barred from submitting bids unless they are ineligible under Section 29A of the Insolvency Act. . The appellate tribunal set aside an order of the Mumbai bench of the National Company Law Tribunal in this regard. It said the mere fact that a person was a promoter and director of a company undergoing corporate insolvency resolution process (CIRP) does not make that person ineligible to submit a resolution plan. The NCLT had said that Section 29A of the Insolvency and Bankruptcy Code (IBC) bars such persons from submitting a resolution plan as it may have an adverse impact on the entire CIRP.
The tribunal had said this while rejecting Mahesh Mathai’s resolution plan for Blue Frog Media. Mathai was a director in the company. Mathai’s proposal was approved by the Committee of Creditors (CoC) with 91.86 percent votes. The resolution professional then filed a petition for approval before the NCLT. But NCLT rejected it. This was challenged by the resolution professional before the Appellate Tribunal. The appellate tribunal said, “Section 29A does not disqualify promoters and directors from submitting a resolution plan. Unless they are ineligible under clause (a) to (g) of the IBC, they are eligible to submit the resolution plan.”
The appellate tribunal said Mathai had resigned from the company even before the resolution plan was submitted. Section 29A of the IBC defines persons who are not eligible for resolution application. Guarantee in favor of lenders in respect of a corporate borrower by persons who are willful defaulters, originators of non-performing assets, have been sentenced to imprisonment for a term exceeding two years or have been banned by SEBI. Granted – There is a ban on them under Section 29A.
Disclaimer: IndiaTheNews has not edited this news. This news has been published from PTI-language feed.
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