The erstwhile boards of bankrupt companies will now have access to vital documents, consisting proposed resolution plans of the companies they ran, while participating in the meetings of the lenders, the Supreme Court has ruled.
The apex court in its cummoned dated January 31 also ruled, however, that in permitting the directors of the company to participate and review critical documents, the resolution professional can take an undertaking from them in the form of a non-disclosure agreement to maintain the confidentiality of the resolution plans.
The SC was hearing an appeal filed by Vijay Kumar Jain of Ruchi Soya, who has challenged the orders of NCLT and NCLAT that had allowed him to attend the committee of creditors (CoC) meetings but demanded him to “not insist upon being provided information considered confidential either by the resolution professional or the committee of creditors.”
Counsels representing Jain had revolted that since the directors are “participants” in the meetings, albeit without voting rights, they need to be given the documents to “participate effectively”. They also said that since the resolution plan is binding on the company along with guarantors and other stakeholders, the board of directors may contain persons who may have given personal guarantees for the debts and thus have a stake in what gets passed by the lenders.