Edelweiss files complaint with the IBBI in Synergies Dooray Case

While the first resolution plan proposed under the Insolvency and Bankruptcy Code, 2016 is being challenged at the NCLAT, Edelweiss has lodged a complaint with the Insolvency and Bankruptcy Board of India (IBBI) against the resolution professional, Mamta Binani..During the first week of August 2017, the Hyderabad Bench of NCLT had admitted the resolution plan, with modifications, filed by debtor company Synergies Dooray Automotive Ltd. The complainant, Edelweiss (Asset Reconstruction Company), is one of the four financial creditors in this case..Note that while the proceedings were still pending before the NCLT, Edelweiss had approached the Tribunal under Section 60 of the Code, alleging various irregularities Binani’s part. The NCLT, however, found no merit in the allegations and dismissed the same through a separate order..Edelweiss’s primary grievance is with respect to assignment of debt by Synergies Castings Limited (SCL) to Millenium Finance Limited (MFL) on 24 Novmber, 2016, just a week before the operationalisation of the Code. And the complaint filed with the IBBI has a lot to do with Binani’s allegedly callous attitude towards this assignment. The complaint alleges breach of Code of Conduct by Binani,.“ ….by refusing to take note of and investigate the fraud perpetrated by the Corporate Debtor, its related party, SCL and the non-banking financial company being MFL which acted in connivance to defeat the right of effective participations, lawfully entitled voting right, legitimate claim and interest of Edelweiss. ”.The mala fide transfer, as per the complaint, was done in collusion by both parties insofar as SCL wouldn’t be allowed to be a part of the Committee of Creditors as it is a related party. Section 21 of the Code prohibits a related party from having any right in the Committee. As is evident and obvious from the tone of the complaint, the assignment was orchestrated by SCL to put in place a proxy in the Committee..The mala fide nature of the transfer, according to the complaint, is further corroborated by evidence suggesting that there was in fact no consideration paid for this transfer, that MFL did not even once contest the trimming of Rs. 75.72 off its (assigned) debt and, that there was belated registration as well as stamping of the assignment deed..Several other allegations have been made in the complaint concerning Binani’s conduct as a resolution professional, who “grossly overstepped strict lines of objectivity and impartiality laid down by the Code of Conduct in the IP Regulations”..In its complaint, Edelweiss has lastly requested the IBBI to constitute a disciplinary committee and conduct investigation under Section 218 of the Code.