2018 (6) TMI 1586 - Tri - Insolvency and Bankruptcy

Corporate insolvency process - waiver in respect of the past tax dues to the Government which may arise in future and exempt the Resolution Applicant from the export obligations, which the corporate debtor had entered - HELD THAT - Since the corporate debtor defaulted in making the payment of the debt and is undergoing insolvency resolution process, it would be perfectly legal in exempting the Resolution Applicant from complying with the export obligations as it is taking over the corporate debtor on fulfilling certain conditions including payments to the Financial Creditors as agreed upon and the plan must be implemented free of any such conditions. There is no haircut for the payment obligations to the operational creditor and as they are to be paid their dues in the normal course of business. Even the past employees of the corporate debtor will continue to be engaged by the Resolution Applicant without having recourse to termination of their services and shall be paid as per the existing agreement with them. The initial amount of ₹45 lacs stands already deposited by the Resolution Applicant. The Resolution Plan Annexure A-25 stands approved granting waiver in respect of the past tax dues to the Government which may arise in future and exempt the Resolution Applicant from the export obligations, which the corporate debtor had entered. It is further stipulated that all the operational creditors shall be paid their dues in the normal course of business and the employees of the company will not be terminated and would be paid as per the existing agreement. The Resolution Plan so approved shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan. The Resolution Applicant shall be bound to pay the rest of the balance amount of ₹405 lacs within 30 days from the receipt of the certified copy of this order.

Summary

Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) and Section 31 of the Insolvency and Bankruptcy Code, 2016.
2. Constitution and functioning of the Committee of Creditors (CoC).
3. Valuation and liquidation process.
4. Submission and evaluation of the Resolution Plan.
5. Conditions and waivers requested in the Resolution Plan.
6. Compliance with statutory requirements and regulations.
7. Approval and implementation of the Resolution Plan.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan:
The application was filed by the Resolution Professional for approval of a Resolution Plan submitted by Harsh Poultry Farms under Section 30(6) and Section 31 of the Insolvency and Bankruptcy Code, 2016, read with Regulation 39(4) of the CIRP Regulations.

2. Constitution and Functioning of the CoC:
The Resolution Professional constituted a Committee of Creditors (CoC) comprising State Bank of India (SBI) with a 96.22% voting share and Bank of India (BoI) with a 3.78% voting share. The total debt amounted to ?32,52,38,249.84. The CoC held multiple meetings to discuss and approve the Resolution Plan, including the process for Expression of Interest (EOI) and the evaluation of the Resolution Plan.

3. Valuation and Liquidation Process:
Two registered valuers were appointed to determine the liquidation value, which averaged ?3.91 crores. The Resolution Professional prepared an Information Memorandum and invited claims from creditors.

4. Submission and Evaluation of the Resolution Plan:
The Resolution Plan submitted by Harsh Poultry Farms proposed a total bid of ?5.25 crores, later revised to ?5.5 crores. The plan included detailed payment schedules and conditions, such as the transfer of land owned by promoters to the company. The CoC discussed and suggested modifications to the plan, which were incorporated by the Resolution Applicant.

5. Conditions and Waivers Requested in the Resolution Plan:
The Resolution Applicant requested waivers for liability to any taxation dues for previous periods and exemption from pending export obligations. The CoC could not decide on these waivers, as they were beyond its competence. The Tribunal considered these requests and found it reasonable to exempt the Resolution Applicant from these obligations.

6. Compliance with Statutory Requirements and Regulations:
The Resolution Professional confirmed compliance with various provisions of the Code and Regulations, including Sections 30(2), 37(1), 38(1), 38(2), and 38(3) of the CIRP Regulations. The Resolution Plan was unanimously approved by the CoC within the stipulated 180 days.

7. Approval and Implementation of the Resolution Plan:
The Tribunal approved the Resolution Plan, granting waivers for past tax dues and export obligations. The plan provided for the payment of insolvency resolution process costs, repayment of debts to operational creditors, management of the Corporate Debtor's affairs, and supervision of the plan's implementation. The Resolution Applicant was directed to pay the balance amount of ?405 lakhs within 30 days from the receipt of the certified copy of the order.

Conclusion:
The Resolution Plan submitted by Harsh Poultry Farms was approved, subject to certain conditions and waivers. The plan addressed the interests of all stakeholders, including financial creditors, operational creditors, and employees. The Tribunal directed the cessation of the moratorium order and the forwarding of all records to the Insolvency and Bankruptcy Board of India. The case was adjourned for further proceedings.