Dentons Link Legal has assisted Educomp Solutions to secure approval from the National Company Law Tribunal (NCLT) for the resolution plan proposed by Ebix Singapore.
Educomp Solutions is an edtech company that has been undergoing corporate insolvency resolution proceedings since 2017. Partner Abhishek Sharma, senior associate Gaurav Arora and associate Kritya Sinha led the Dentons Link Legal team, which represented Mahender Kumar Khandelwal, the resolution professional for Educomp Solutions, who submitted the endorsement application for the plan.
“The resolution of Educomp is a case study about how delays in judicial proceedings can severely affect the resolution of a corporate debtor under the Insolvency and Bankruptcy Code,” said partner Sharma.
“The case has also established a judicial precedent and it is no longer open to a resolution applicant to withdraw its resolution plan citing subsequent developments, which might have taken place after the resolution plan was approved.”
On 30 May 2017, the second New Delhi bench of the NCLT initiated the corporate insolvency resolution process against Educomp Solutions. In 2018, the committee of creditors (CoC) approved the resolution plan presented by Ebix Singapore.
Ebix Singapore later sought to withdraw this resolution plan on various grounds, leading to a legal appeal that reached the Supreme Court.
Ebix Singapore, the resolution applicant since February 2018 with a 75.35% approval by lenders, faced a setback in the CIRP process. The Ministry of Corporate Affairs initiated an investigation into Educomp Solutions for financial fraud from 2014-2018.
Ebix filed three withdrawal applications, with the NCLT summarily rejecting two, and emphasising the binding nature of a CoC-approved plan. The NCLT allowed the third withdrawal, citing section 31 of the code, highlighting that a resolution plan only becomes binding on acceptance by the adjudicating authority. The NCLT further stressed that an unwilling resolution applicant cannot effectively revive the corporate debtor or ensure the plan’s implementation.
In a landmark ruling on 13 September, the Supreme Court dismissed Ebix Singapore’s appeal and refused to permit the withdrawal of its resolution plan.
Following the Supreme Court ruling, the NCLT reviewed the plan approval application and took account of the objections, including those raised by Ebix Singapore and granted approval for the plan on 9 October 2023.
Ebix is now required to provide a performance bank guarantee of INR3.25 billion (USD38.3 million) to implement the plan, ensuring adherence to all stipulated terms. The resolution plan has allocated INR3.25 billion to Educomp’s creditors, settling against their total claims of INR30.08 billion.
Financial creditors are slated to receive the full amount of USD376 million in admitted claims, with a provision for INR68 million to be paid to non-promoter shareholders concluding the Educomp insolvency case.
