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Suspended Director Of Corporate Debtor Not Entitled To Confidential Info

In Vijay Kumar Jain vs Resolution Professional,  applicant was a suspended director of a corporate debtor who sought documents and information placed before the CoC and sought the tribunal to direct that all documents and information be provided to him for setting aside the CIRP process. The  CoC and the RP were apprehensive that doing so will be detrimental to the interest of the creditors in maximization of the value of the assets of the company.

He said being the suspended director of the corporate debtor, he had the right to participate in the CoC meetings and to receive all documents tendered before the CoC which are pertinent to the issues that come up in its meetings as well as CIRP proceedings of the corporate debtor.

The Mumbai bench of National Company Law Tribunal (NCLT) while rejecting the application referred to the Code and held that as per this code as well as the CIRP regulations, either the suspended director or any other person other than the CoC will not be called as members, they are defined as participants, therefore, wherever participants are entitled to get the information, this suspended Board of Directors are equally entitled to get the same. In the event where disclosure is limited to members alone, such information need not be given to the participants, other than the CoC. However, when it has come to a resolution plan in Regulation 35, it has been categorically mentioned that the resolution professional can provide the fair value and liquidation value to the members alone that too after taking confidentiality undertaking from such members and it has not been mentioned anywhere that this resolution plan or the valuations can be parted with the suspended directors.

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