2018 (4) TMI 1779 - Tri - Insolvency and Bankruptcy

Approval of Resolution Plan - outstanding debt - objection is that the Applicant has dissented the approval of the Resolution Plan, therefore, as per the communication received, disentitled for the claim - HELD THAT - The Procedure as prescribed under The Code is that a Resolution Plan is required to be submitted by a Resolution Application u/s 30 of The Code. On approval, the Resolution Professional is to submit U/s 30(6) the Resolution Plan, as approved by the Committee of Creditors, to the AA. Thereafter, u/s 31, as reproduced supra, AA is to examine the contents of the Resolution Plan. The mandate of this section is that if the AA is satisfied that the Resolution Plan as approved by the Committee of Creditors meets the requirement as referred to in section 30(2), shall by an Order, approve the Resolution Plan. So the prerequisite is that recording of satisfaction by AA is a condition precedent. A satisfaction is to be recorded in writing in the Judgment approving the Resolution Plan. Satisfaction is required to be based upon a conscious decision on examination of the terms of the Resolution Plan. An 'objective satisfaction' revolves around the object of enactment of the Code as enshrined in the Preamble of the I B Code i.e. to revive the financially stressed corporate body. And the 'subjective satisfaction' depends upon logical analysis of the Financial Data supplied so as to match with the business model of the Corporate Debtor. A methodical scrutiny of Financial Statement is expected before concurring with approval of the COC. There are no two views, and must not be, that this I B Code provides greater accountability both on the Insolvency Professional, as also on COC, mainly comprise of lender Banks. Their approval of a Resolution Plan ought to be judged with due diligence. To sum up, in our humble interpretation the recording of an analytical 'satisfaction' is a condition precedent before granting of approval. The Resolution Plan as approved by the Committee of Creditors is by and large hereby sanctioned by this Order subject to certain minor qualifications.

Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016.
2. Admission and substitution of the Interim Resolution Professional (IRP).
3. Evaluation and selection of Resolution Plans.
4. Treatment of dissenting financial creditors.
5. Feasibility and implementation of the approved Resolution Plan.
6. Supervision and management post-approval of the Resolution Plan.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016:
An application was moved by the Learned Resolution Professional on 17.01.2018 for approval of a Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016, read with Regulation 39(4) of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) 2016. The Tribunal approved the Resolution Plan as prescribed under Section 31(1) of the Code.

2. Admission and Substitution of the Interim Resolution Professional (IRP):
The Corporate Debtor filed a petition under Section 10 of the Code on 23.06.2017, which was admitted on 10.07.2017. Initially, Mr. U.V.G. Nayak was appointed as the IRP, who carried out duties including publishing the commencement of CIRP, constituting the Committee of Creditors (COC), and appointing valuers. Subsequently, a resolution was passed by the COC for the substitution of the IRP, and Dr. Rajendra M. Ganatra was appointed as the Resolution Professional on 15.09.2017.

3. Evaluation and Selection of Resolution Plans:
Three Resolution Plans were received from Dipti Vegoils Ltd (DVL), Rubberwala Housing and Infrastructure Ltd. (RHIL), and Recon Oil Industries Pvt. Ltd. (Recon). The COC held multiple meetings to evaluate and improve the plans. Ultimately, the COC voted in favor of the Resolution Plan submitted by RHIL jointly with Mukhi Industries Limited (MIL) by 77.68% voting. The Resolution Plan included a commitment to pay ?6224 Lakhs to creditors, invest ?200 Lakhs in plant refurbishment, ?1000 Lakhs in working capital, and ?60 Lakhs in insolvency resolution process costs.

4. Treatment of Dissenting Financial Creditors:
SICOM Limited, an unsecured financial creditor, dissented against the approved Resolution Plan. The Tribunal clarified that dissenting financial creditors are entitled to receive the liquidation value as per Section 30 of the Code and Regulation 38 of the CIRP Regulations. SICOM's claim of ?1.07 Crore was to be considered after the settlement of secured loans.

5. Feasibility and Implementation of the Approved Resolution Plan:
The Tribunal examined the feasibility of the Resolution Plan, which included a detailed financial restructuring plan, capital restructuring, and a commitment to pay outstanding dues to workers and employees. The Plan also provided for the payment of insolvency resolution process costs and the continuation of the company's business operations. The Resolution Plan was found to be in adherence to the regulations and was approved with certain modifications.

6. Supervision and Management Post-Approval of the Resolution Plan:
A Supervision Committee was to be formed to oversee the implementation of the Resolution Plan over the next four years. The Resolution Professional was directed to hand over the charge of the Corporate Debtor, including books of accounts and assets, to the new management. The new promoters were to step into the shoes of the outgoing company, retaining tenancy rights and other agreements.

Conclusion:
The Resolution Plan was approved subject to modifications, binding on the Corporate Debtor and other stakeholders. The Tribunal emphasized the need for a detailed examination and recording of satisfaction before approval. The incoming management was not to be held responsible for any past acts or omissions of the erstwhile management. Directions were issued for the implementation of the Resolution Plan, effective from the date of the order.

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