As per the reports, the National Company Law Appellate Tribunal (NCLAT) has held that liquidation process of a company under the IBC holds precedence over the result of arbitration proceedings under IBC. Objections raised to Bharat Heavy Electricals Limited (BHEL) liquidation of Tamil Nadu-based Surana Power were invalid as majority of secured creditors consented to its liquidation. It would be prejudicial to hamper the liquidation process of a single creditor having only 26.24% share (in value) in the secured assets of the company.
BHEL is not superior from the rest of the financial creditors. A valid resolution plan was not received by the company & was ordered to be liquidated by the National Company Law Tribunal (Chennai Bench). An ex-parte arbitration award was granted to state-run BHEL against Suarana Power, which gave a lien over all the equipment & goods which were lying at Surana Power’s plant, & also for its partially or fully constructed buildings.
Further, BHEL, one of the secured creditors refused to give its consent for liquidation as it would result into getting lesser share. It can be concluded that the Adjudicating Authority ruled in favour of BHEL & set-aside the ruling of NCLT. It also stated that the state-run company has full rights over the realization of security interests which it had won as a part of the arbitration proceedings.
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