# Approval of Resolution Plan - New Empire Textile Processor Private Limited

> NCLT judgment dated 2023-11-22. Citation: TCN-2023-NCLT-00612. The document pertains to a set of Interlocutory Applications (IAs) filed in connection with a…

- **Court:** NCLT
- **Order date:** 22 Nov 2023
- **Citation:** TCN-2023-NCLT-00612
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/approval-of-resolution-plan-new-empire-textile-processor-private-limited-c2bf8587

## Summary

### Background

The document pertains to a set of Interlocutory Applications (IAs) filed in connection with a Corporate Insolvency Resolution Process (CIRP) initiated against New Empire Textile Processor Private Limited. The IAs, filed by operational creditors, object to the resolution plan proposed for the corporate debtor. The core contention revolves around the distribution of funds under the resolution plan, particularly the allocation of NIL value to operational creditors while financial creditors receive 100% of their dues. The resolution professional (RP) argues that the amount claimed by creditors exceeds available funds, justifying the NIL allocation to operational creditors under Section 53(1)(f) of the Insolvency and Bankruptcy Code (IBC). The RP also highlights the receipt

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## Facts

The Corporate Insolvency Resolution Process (CIRP) was initiated against New Empire Textile Processor Private Limited. Several Interlocutory Applications (IAs) were filed by operational creditors objecting to the proposed resolution plan. The operational creditors lodged their claims in Form B during the CIRP. The Resolution Professional (RP) admitted the claims of the operational creditors. The resolution plan, approved by the Committee of Creditors (CoC) on 13.02.2020, proposed a NIL payment to operational creditors. During the CIRP, a director of the Corporate Debtor paid Rs. 2.41 Crores to the RP related to a flat purchased in an avoidance transaction. An additional Rs. 2.41 Crores was received by the RP, exceeding the liquidation value. The CoC approved charges of

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## Issues and analysis

### Issue 1: Whether the proposed resolution plan, which allocates NIL value to operational creditors while …

**Ratio:** The principle of fair and equitable treatment of creditors within the same class is a

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**Reasoning:** The court considered the arguments presented by both the operational creditors and the

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**Interpretation:** Section 53 of the IBC establishes the waterfall mechanism for distribution of

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**Application:** The court found that the proposed resolution plan was discriminatory and

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## Parties

- **Judges:** V.G. B…; Prabhat…
- **Appellants:** Radha Krishna…
- **Respondents:** New Empire…; Kailash…

## Timeline

- **2019-08-26 — Initiation…**: CIRP was initiated against the Corporate…
- **2019-08-26 — Appointment…**: Mr. Kailash Shah was appointed as the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 30(6) — Submission of resolution plan](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-30)

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