2020 (2) TMI 1321 - Tri - Insolvency and Bankruptcy

Implementation of Resolution Plan as approved by NCLT - Resolution Applicant has sought to modify the Resolution Plan after its approval by the CoC and thereafter by NCLT - HELD THAT - The contention of the Resolution Applicant that he has not received detailed information of the Corporate Debtor Company is not borne out by facts. In fact, the Chairman of the Monitoring Agency, as minuted in the meeting of January 07, 2020, clearly brings out that data has been provided to the Resolution Applicant, however, the multiple data request which was being sought was being collated and was taking time because of less number of employees - The contention of the Resolution Applicant that the powers and functions of the Monitoring Agency is limited to conducting the day-today affairs and it cannot file any Application regarding the implementation of the Resolution Plan is highly misplaced. The main contention of the Resolution Applicant is that after the date of the approval of the Resolution Plan by Committee of Creditors on 10.01.2019, all the cash balances and accrual should be adjusted against the upfront payment of ₹ 420 crores. This issue has been unambiguously clarified by the Resolution Professional on more than one occasion that any amendments to the provision to the Resolution Plan as approved by the Committee of Creditors in its meeting dated 10.01.2019 and thereafter submitted to Hon'ble NCLT in the Application u/s. 30 of the IBC is not possible. It is clear from the Application preferred by the Resolution Applicant on behalf of the Monitoring Agency that the Resolution Applicant, Royale Partners Investment Fund Limited, is delaying the implementation of the Plan by raising frivolous issue which are incorrect and untenable. It has also been brought in the Application that as per the Resolution Plan within 30 business days from the date of approval of the Plan, i.e. 25.11.2019 the Resolution Applicant has to bring the upfront payment which is ₹ 420 crores in this instant case - this Bench notes that the upfront payment has not been made by the Resolution Applicant and also the NCDs of ₹ 480 crores has not been issued to the Financial Creditors. This Bench takes a very serious note of it and is also of the view that such type of non-compliance by the Resolution Applicant cannot be allowed. This Bench directs the Resolution Applicant to comply within a week s time of the issue of this Order, the following - (a) Payment of upfront amount of ₹ 420 crore which has already become due consequent to 30 business days getting over from the date of approval of the Resolution Plan by NCLT. (b) Issue of NCDs of ₹ 480 crore in favour of the Financial Creditors. (c) Depositing the balance performance guarantee of ₹ 48 crore within 90 days of the approval of the Resolution Plan by NCLT. Application allowed.

Summary

Issues:
1. Relief sought by the Monitoring Agency of the Corporate Debtor against the Resolution Applicant under section 60(5) of the IBC 2016 for implementing the approved Resolution Plan.
2. Dispute regarding the implementation of the Resolution Plan by the Resolution Applicant, including non-payment of upfront consideration and issuance of NCDs to Financial Creditors.
3. Contention on the amendment of the Resolution Plan terms by the Resolution Applicant post-approval by CoC and NCLT.
4. Dispute over the adjustment of cash balances accruing in the Corporate Debtor against the upfront payment.
5. Locus standi of the Monitoring Agency to file a Miscellaneous Application for implementation of the Resolution Plan.

Analysis:

1. The Monitoring Agency sought directions against the Resolution Applicant to implement the approved Resolution Plan promptly to avoid hindrance in the Corporate Debtor's resolution process, citing the Resolution Applicant's failure to adhere to the approved terms.

2. The Resolution Applicant failed to make the upfront payment and issue NCDs to Financial Creditors within the stipulated timeline post NCLT approval, leading to a breach of the Resolution Plan terms.

3. The Resolution Applicant's attempts to retrospectively amend the Resolution Plan terms were rejected by the Monitoring Agency, emphasizing that approved plans are binding and cannot be modified unilaterally post-approval.

4. Dispute arose over the Resolution Applicant's claim to adjust cash balances accruing in the Corporate Debtor against the upfront payment, contrary to the Resolution Plan's clear provision to accrue and pay such balances to Financial Creditors till the upfront payment date.

5. The Resolution Applicant challenged the Monitoring Agency's locus standi to file the Application, contending that it required authorization from the Steering Committee. However, the Tribunal clarified that the Monitoring Agency and Resolution Professional are duty-bound to ensure successful plan implementation, as permitted by the Tribunal's order.

The Tribunal found the Resolution Applicant's contentions unfounded and ordered compliance with the Resolution Plan terms, directing the Resolution Applicant to make the overdue upfront payment, issue NCDs to Financial Creditors, and deposit the balance performance guarantee within specified timelines to rectify the non-compliance. The Tribunal emphasized the binding nature of the approved Resolution Plan and the Monitoring Agency's authority to seek compliance for successful plan implementation.