The tribunal observed the idea is to prevent liquidation and go for resolution, which is the objective of the two-year-old Insolvency and Bankruptcy Code (IBC).
The ruling in a case involving AMR Infrastructure — where 906 buyers, including 236 for residential projects — can have implications for other homebuyers in projects such as Jaypee and Amrapali, where confusion over voting rights have created uncertainty. In fact, homebuyers have approached the government and the Insolvency & Bankruptcy Board of India (IBBI) to sort out the issue.
The confusion arises from the IBC’s mandate that 66 per cent of the members of the committee of creditors “present and voting” should back crucial resolutions such as appointment of resolution professional or selection of a new buyer. Those who do not vote are considered to have a negative vote, making it tough to reach the crucial 66 per cent threshold. IBBI has been closely monitoring the developments in the case to frame its view on the issue, sources told TOI.
Given that less than 53 per cent of the buyers in AMR’s residential and commercial projects voted, the NCLT’s principal bench observed that the corporate insolvency resolution process has now “met a roadblock” and sought interpretation of the law as the interim resolution professional could not appoint valuers, take control of the assets or even invite resolution plans.
After looking at various aspects, the NCLT said: “… the voting thresholds in the IBC are merely directory in nature, and that preference can be given to decisions taken by the largest percentage in the committee of creditors in case of a deadlock. Only this interpretation would make the code workable and advance the object of this progressive legislation (IBC) rather than defeating it.”
(This article was originally published in The Times of India)