NCLAT sets aside insolvency proceedings against Mack Star Marketing
Appellate tribunal NCLAT has set aside insolvency proceedings against Mack Star Marketing initiated by the NCLT Mumbai after observing that the term-loan provided by Yes Bank to it was an "eye-wash" and "collusive in nature".
A two-member bench held such collusive transactions do not fall within the ambit of the definition of Financial Debt as defined under Section 5(8) of the Insolvency & Bankruptcy Code and therefore Suraksha Asset Reconstruction cannot be termed as a Financial Creditor.
The NCLAT observed that out of Rs 147.6 crore -- sanctioned by Yes Bank in Mack Star's name for the purpose of renovating 'Kaledonia' a two-year-old building constructed at a cost of Rs 100 crore -- more than 99 per cent of the amount was routed back to Yes Bank either on the same day or within a very short period.
"The chequered history of the loan transactions and collusive arrangements indulged by Yes Bank demonstrates that the Term Loans disbursed in the name of Mack Star is an eye-wash' and