NCLAT Upholds Distribution Plan in OCL Iron and Steel Case

The National Company Law Appellate Tribunal (NCLAT) dismissed a petition by five banks contesting the fund distribution to dissenting creditors SBI and Punjab National Bank in the OCL Iron and Steel insolvency proceedings. The approved distribution mechanism was upheld as fair and lawful. The case involved a resolution plan and relief sought by Indrani Patnaik.

The National Company Law Appellate Tribunal (NCLAT) has rejected an appeal by five banks concerning the distribution of funds in the OCL Iron and Steel insolvency case. The banks, including Indian Bank and ICICI Bank, had challenged the payment to dissenting creditors, the State Bank of India (SBI) and Punjab National Bank.

A two-member NCLAT bench ruled that the distribution plan, as approved by the Committee of Creditors (CoC) and backed by the National Company Law Tribunal (NCLT), is lawful. The tribunal affirms that the 'Monitoring Committee' formed post-bid could not alter the funds allocation mechanism.

This controversy emerged after OCL Iron and Steel entered insolvency proceedings in 2021. The resolution plan, led by bidder Indrani Patnaik, saw an affirmative CoC vote. However, discrepancies over fund distribution prompted the unsuccessful appeal by the five banks, ultimately dismissed by the appellate tribunal.

(With inputs from agencies.)