NCLAT declines to interfere in insolvency proceedings against Thiru Arooran Sugars

The National Company Law Appellate Tribunal (NCLAT) has declined to interfere in the ongoing insolvency proceedings against Thiru Arooran Sugars matter, observing that Committee of Creditors (CoC) was already instituted under the IBC.

However, the appellate tribunal said the company's promoter R V Tyagarajan may settle claims against the company from the financial creditors, mainly State Bank of India under insolvency and bankruptcy code (IBC), provided it gets approved with 90 per cent votes by lenders.

The appellate tribunal was informed by the counsel appearing on behalf of the promoter that he was ready to settle the matter with State Bank of India, its financial creditor, however, the other party informed that the claims have been collated and the matter was already been looked into by the CoC.

The NCLAT has directed the company's resolution professional (RP) that if such a proposal is made by the promoter and it gets approved with 90 per cent votes by lenders under the Section 12 A of IBC, then he would move a plea before the National Company Law Tribunal (NCLT) for withdrawal of the insolvency proceedings.

"We are not inclined to interfere with the impugned order dated June 7, 2019 but give liberty to the appellant to settle the matter," said a three-member NCLAT bench headed by Chairperson S J Mukhopadhaya in its order passed on September 2, 2019.

On June 7, 2019, the Chennai Bench of the National Company Law Tribunal (NCLT) had admitted the plea filed by SBI and had directed to initiate insolvency proceedings against the Tamil Nadu-based sugar company.

The said order was challenged by company's Chairman and Managing Director Tyagarajan before NCLAT.

Section 12A of the Insolvency and Bankruptcy Code (IBC) allows corporate debtor to settle its defaults and get the company out of insolvency proceedings after settling the claims of lenders.

SBI had moved NCLT claiming a dues of Rs 149.36 crore.