NCLAT rejects plea against McDowell Holdings' insolvency proceedings

The National Company Law Appellate Tribunal (NCLAT) has rejected a plea by the shareholders of McDowell Holdings Ltd, challenging the initiation of the corporate insolvency resolution process (CIRP) against the firm.

A two-member bench of the appellate tribunal upheld the order of the Bengaluru bench of the National Company Law Tribunal (NCLT), which on April 8, 2022, directed to initiate CIRP over the plea filed by its financial creditor Sunstar Hotels and Estates.

Nine shareholders, who together hold more than 15 per cent of the stake in McDowell Holdings Ltd (MHL), had moved the NCLAT against the order.

While rejecting the plea, the NCLAT observed that the shareholders "do not have any 'Locus', and therefore the present appeals are not maintainable."

The appellate tribunal stated that in its earlier rulings, the NCLAT had "held that an investor in a Corporate Debtor cannot claim to be an 'aggrieved person' for preferring an appeal against an order against insolvency petition."