Operational Creditors Cannot Seek Resolution Plan Disclosure At Pre-Approval Stage: NCLT Ahmedabad In JAL CIRP

The Allahabad Bench of the National Company Law Tribunal (NCLT) has recently held that operational creditors cannot seek disclosure of a resolution plan or liquidation value at the pre-approval stage under the Insolvency and Bankruptcy Code while rejecting a plea arising out of the insolvency of JaiPrakash Associates Limited.

Notably, The resolution plan for the company was approved on March 17 in separate proceedings and is under challenge before the National Company Law Appellate Tribunal.

A bench of Judicial Member Praveen Gupta and Technical Member Ashish Verma relying on NCLAT's ruling in Jet Airways observed, “The statutory scheme does not envisage disclosure of the Resolution Plan to individual Operational Creditors at the pre-approval stage, and any such direction would run contrary to the confidentiality regime embedded in the insolvency framework.”

It further observed, “In the present case, the Applicant, being an Operational Creditor, is neither a member nor a participant in the CoC meetings within the meaning of the aforesaid provisions. Consequently, the Applicant cannot claim an independent or enforceable right to access the Resolution Plan during the pendency of its consideration under Section 31 of the Code.”

The case was brought by SBC Minerals Pvt Ltd, an operational creditor of JaiPrakash Associates Limited with an admitted claim of Rs 17.68 crore. It sought disclosure of the liquidation value and relevant portions of the resolution plan and also sought to be heard in the plan approval proceedings.

The applicant argued that without disclosure, it could not verify whether the plan complied with the requirement to pay operational creditors at least the liquidation value. The resolution professional opposed the plea, stating that operational creditors have no locus to intervene in resolution plan approval proceedings and that the claim had already been admitted.

The tribunal agreed, holding that a resolution plan remains confidential until approval and can be shared only with participants in Committee of Creditors meetings. Since operational creditors are not participants or members of that body, they cannot demand access.

On liquidation value, it held that the regulations restrict disclosure to Committee of Creditors members under confidentiality undertakings. Finding no grounds for interference, the tribunal dismissed the application.