The National Company Law Appellate Tribunal (NCLAT) is likely to pronounce its order in the Edelweiss versus Synergies Dooray case, the first debt resolution plan to be approved under the Insolvency and Bankruptcy Code (IBC), by the end of this month. A three-member bench of the NCLAT, led by its chairperson justice SJ Mukhopadhaya, admitted the appeal on October 11. “The matter is likely to be listed for final hearing on November 22-23,” senior advocate Jyoti Singh, who appeared on behalf of Edelweiss, said on Monday. Edelweiss Asset Reconstruction Company (ARC) approached the appellate tribunal seeking to set aside the August 2 order of the Hyderabad bench of National Company Law Tribunal (NCLT) that had dismissed its plea for scrapping the debt recast plan of Synergies Dooray. Edelweiss ARC had challenged the resolution plan as it had to take a staggering haircut of more than 90% on the original outstanding loan of Rs 86.92 crore. Other lenders – Synergies Castings (SCL) and Millennium Finance (MFL) — were also supposed to take haircuts. Edelweiss had alleged that “a fraud was perpetrated by Synergies Dooray, the corporate debtor, its related party, Synergies Castings (SCL) and Millennium Finance (MFL)”. The ARC had challenged the resolution process as its voting rights in the committee of creditors drastically came down despite being one of the largest financial creditors, mainly because of the debt assignment agreement entered into between SCL and MFL.
“The appellant (Edelweiss) was shocked to note that SCL had purportedly assigned a major portion of its debt holding in the corporate debtor (Synergies Dooray) to MFL allegedly on November 26. The corporate debtor and SCL have colluded to perpetrate fraud on the creditors of the corporate debtor since the beginning,” the company said in its appeal.
According to Edelweiss, the agreement between SCL and MFL constituted a mala fide suppression of material facts. Alleging that the insolvency professional has committed material irregularity in exercise of the power, it also said the debt recast arrangements were “sham transactions and fraud perpetrated on the financial creditors”. It argued that the constitution of the committee of creditors was invalid.Synergies Dooray debt recast: Edelweiss goes to NCLAT, decision by month end likely