Liquidation Value vis a vis Dissenting Financial Creditors : Aftermath of Maharashtra Seamless and Orchid Pharma

The Insolvency Bankruptcy Code, 2016 (“Code”) has gone through a myriad of changes since its inception and introduction. Although it has been held by the Supreme Court in the case of Embassy Property Developments Pvt. Ltd. vs State of Karnataka, that the IBC is a complete Code by itself and in Innoventive Industries Ltd. vs ICICI Bank that the Code is a single Unified Umbrella, covering the entire gamut of law relating to insolvency resolution of corporate persons and others in a time bound manner, there was still a need and necessity to ensure that regular tweaks were effected to make the Code acclimated with the changing dynamics and circumstances. In the above context, the decisions of the Supreme Court in the cases of Maharashtra Seamless Ltd. vs Padmanabhan Venkatesh and State Bank of India vs Accord Life Spec Pvt. Ltd. (Orchid Pharma Case) assumes great significance, in the evolution of the IBC, especially by reiterating the autonomy and wisdom of the CoC, as held in the case of K. Sashidhar vs Indian Overseas Bank, while also establishing that there is no prohibition in approving a resolution plan which is lesser than the liquidation value. The effect of the said decisions will, therefore, have great implications at the stage of distribution of amounts as per the Resolution Plan to the various stakeholders, especially while considering the same along with the amendments made to the Code on August 2019