2020 (6) TMI 716 - Tri - Insolvency and Bankruptcy

Sale of one of the non-core assets of the Corporate Debtor to clear overseas debt of Jet Airways/ Corporate Debtor to ensure six air crafts are freed from encumbrances so that it would hugely maximize the value of the Corporate Debtor during CIRP period - HELD THAT - On looking at the averments of the application and documents annexed thereto, for there being no objection either from any member of the COC or from the charge holder of the premises i.e., HDFC, apart from this, for there being huge value addition to the Corporate Debtor, this Bench hereby allowed this application approving the resolution approved by the COC on April 24, 2020. The applicant is hereby permitted to sell the Premises for utilising the proceeds of the sale of the 3rd and 4th floor to settle the claims of HDFC at INR 360 crores, upon HDFC giving up security interest, charge, or any other rights in respect of the Premises and withdrawing the pending Application simultaneously against receipt of the above sum of INR 360,00,00,000 with no further responsibility or liability on HDFC for or towards any further or other costs, charges, claims in connection with the insolvency process or otherwise howsoever, including in the event of any liquidation of the Corporate Debtor, and HDFC charge, security interests, and rights in Debtor, and HDFC charge, security interests, and rights in the Premises shall remain unaffected until receipt of the full sum of INR 360,00,00,000 and the balance sums remaining from the sale proceeds of the 3rd and 4th floor of the Premises towards settlement with US Exim and CIRP costs. Application allowed.

Issues:
1. Approval for sale of non-core asset to clear overseas debt and maximize value during CIRP.
2. Security interest in premises owned by Corporate Debtor in favor of HDFC.
3. Utilization of proceeds from sale of premises for clearing dues to US Exim and HDFC.
4. Financial implications of unpaid amounts to US Exim and potential repossession of aircraft.
5. Attempts to raise finance and necessity to explore alternative means.
6. Importance of sale of non-core asset to unlock value of core assets.
7. Arrangement with HDFC for release of security interest over premises.
8. Approval of COC for sale of premises and payment to HDFC and US Exim.
9. No objection from HDFC and support for the application.
10. Tribunal's decision on the application for sale of premises and settlement with HDFC.

Analysis:
1. The Resolution Professional (RP) filed an application seeking approval for selling a non-core asset of the Corporate Debtor to clear overseas debt and enhance the value during the Corporate Insolvency Resolution Process (CIRP). The asset in question is a premises owned by the Corporate Debtor, which was mortgaged to HDFC to secure a loan.

2. HDFC had a security interest in the premises due to a loan advanced to the Corporate Debtor. The RP requested permission to sell the premises as approved by the Committee of Creditors (COC) to settle dues to US Exim Bank and HDFC, particularly related to the finance lease on six aircraft.

3. The RP highlighted the urgency to clear dues to US Exim Bank to prevent potential repossession of six aircraft leased to the Corporate Debtor. Despite failed attempts to secure interim finance, the RP emphasized the critical need to explore alternative financing options for the benefit of the Corporate Debtor.

4. The sale of the non-core asset, the premises, was deemed essential to generate funds required to pay off US Exim Bank and unlock the full value of the six aircraft, crucial core assets. The sale was contingent upon HDFC's consent, as it held a security interest over the premises.

5. An agreement was reached with HDFC to release its security interest over the premises upon receiving a specific sum from the sale proceeds. The COC approved this arrangement, emphasizing its benefits for the Corporate Debtor and stakeholders, with no prejudice to any party.

6. HDFC confirmed its support for the application, and with no objections from COC members or HDFC, the Tribunal approved the application. The RP was permitted to sell the premises, settle HDFC's claims, and utilize the proceeds for the benefit of the Corporate Debtor, with HDFC's rights remaining intact until full payment.

7. The Tribunal's decision allowed the RP to proceed with the sale of the premises, emphasizing the value addition to the Corporate Debtor and the necessity to settle outstanding dues to secure core assets and maximize the estate's value.

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