IBC Provision not Mandates Treatment of Related Party at Par with unrelated Party: NCLAT upholds NCLT Order [Read Order]

The National Company Law Appellate Tribunal, Principal Bench upheld the National Company Law Tribunal's decision, stating that the Insolvency Bankruptcy Code (IBC), 2016 does not mandate treating related parties equally with unrelated parties. \r

In the case involving Fort Gloster Industries Limited, the appellant, West Coast Paper Mills Ltd., sought equal treatment with financial creditors under the resolution plan. However, the tribunal noted that the appellant, being a related party unsecured creditor, was not entitled to parity with secured financial creditors. \r

The resolution plan, reflecting this status, was approved by the Committee of Creditors and the Adjudicating Authority. The tribunal, consisting of two members, held that such differential treatment was within the rights of the Committee of Creditors and the Adjudicating Authority.