What would be your answer, if Thomas, who is the CFO (Key Managerial Personnel) in the SFL resigns before the initiation of the CIRP so as to give effect to the exclusion of 'related party' in terms of Section 5(24A)(b)

Section 5(24) of the Insolvency and Bankruptcy Code, 2016 defines "related party", in relation to a corporate debtor, to mean: (b) a key managerial personnel of the corporate debtor or a relative of a key managerial personnel of the corporate debtor; Therefore, SFL falls in the category of related party by virtue of Thomas (CFO i.e. KMP of SFL, the corporate debtor) being brother of Mathew (C.S. i.e. KMP of A-One financial creditor). As a related party, Mathew shall not have any right of representation, participation or voting in a meeting of the committee of creditors in pursuance to the proviso of section 21(2) of the Insolvency and Bankruptcy Code, 2016. The Supreme Court in the matter of ' Phoenix Arc Private Limited Vs. Spade Financial Services Limited & Ors. ', clarified that while the default rule under the first proviso to Section 21(2) is that only those financial creditors that are related parties in praesenti would be debarred from the Committee, those related party financial creditors that cease to be related parties in order to circumvent the exclusion under the first proviso to Section 21(2), should also be considered as being covered by the exclusion thereunder. Thus, relatedness of related parties at the present time would be considered for exclusion from the Committee. In addition, any parties that were related in the past and cease to be related parties at present in order to become a member of the Committee must also be considered for exclusion from the Committee. Therefore, there will be no change in the answer even if Thomas resigns or ceases to be CFO of SFL. Under Section 5(24)(b), a KMP of the corporate debtor or their relative is a related party. Thomas, being CFO of SFL and brother of Mathew (CS of A-One Bank), is a related party. As clarified in Phoenix ARC Pvt. Ltd. v. Spade Financial Services Ltd. (Supreme Court, 2021) , resignation does not erase related party status if done to circumvent exclusion. Hence, SFL remains a related party, and Mathew shall not have any right of representation, participation, or voting in the CoC under Section 21(2).