2019 (12) TMI 1397 - Tri - Insolvency and Bankruptcy

Approval of the resolution plan - section 30(6) and 31 of Insolvency and Bankruptcy Code 2016 - HELD THAT - This Bench being satisfied with the valuation given by the registered valuers estimation of turnover during the resolution period repayment schedule to all the creditors the approval of resolution plan as approved by the CoC with 87.62% voting approves the resolution plan - this Resolution Plan approved by the COC with the required majority satisfies all the criteria required for approval of Resolution Plan and accordingly the Resolution Plan is approved. The Resolution Applicant on taking control of the Corporate Debtor shall ensure compliance under all applicable law for the time being in force. The resolution plan has necessary provisions for its effective implementation - The resolution applicant shall obtain the necessary approval required under any law for the time being in force within one year from the date of this order or within such period as provided for in such law whichever is later. The resolution plan is approved which shall be binding on the Corporate Debtor and its employees members creditors guarantors Resolution Applicant and other stakeholders involved in the resolution plan. This Bench hereby discharges the RP from duties of the RP by submitting all the records maintained by him to the Insolvency and Bankruptcy Board of India as provided under the Insolvency and Bankruptcy Code 2016 and the regulations thereunder - Application allowed.

Issues Involved:
1. Application under Sections 30(6) and 31 of Insolvency and Bankruptcy Code, 2016.
2. Appointment and actions of the Interim Resolution Professional (IRP) and Resolution Professional (RP).
3. Compliance with the Insolvency and Bankruptcy Code (IBC) and relevant rules and regulations.
4. Approval and voting on the resolution plan by the Committee of Creditors (CoC).
5. Provisions for repayment of dues in the resolution plan.
6. Composition and intentions of the Resolution Applicant.
7. Management and control of the Corporate Debtor post-approval of the resolution plan.
8. Write-down of equity shares and restructuring of share capital.
9. Compliance with Section 30 and 31 of the IBC and regulations 38 and 39 of CIRP Regulations.
10. Judicial review and commercial wisdom of the CoC.
11. Approval and implementation of the resolution plan.

Detailed Analysis:

1. Application under Sections 30(6) and 31 of Insolvency and Bankruptcy Code, 2016:
The application was filed under Sections 30(6) and 31 of the Insolvency and Bankruptcy Code, 2016, seeking approval of the resolution plan for the Corporate Debtor, Surya Treasure Island Private Limited, which was admitted for Corporate Insolvency Resolution Process (CIRP) on 18.02.2018.

2. Appointment and actions of the Interim Resolution Professional (IRP) and Resolution Professional (RP):
Ms. Jovita Reema Mathias was appointed as the IRP and later confirmed as the RP by the CoC on 20.03.2019. The RP conducted the CIRP in compliance with the Code and relevant regulations, including issuing advertisements for claims, appointing valuers, and inviting Expressions of Interest (EOI).

3. Compliance with the Insolvency and Bankruptcy Code (IBC) and relevant rules and regulations:
The RP certified that the resolution plan conformed to the conditions under Section 30(2) of the IBC. The plan aimed to revive the Corporate Debtor, utilize its assets, and ensure stability in employment and income from renting business.

4. Approval and voting on the resolution plan by the Committee of Creditors (CoC):
The resolution plan was discussed and voted upon in the CoC meeting dated 12.08.2018, where it was approved by 87.62% of the CoC members, with 6.84% dissenting and 5.54% abstaining from voting.

5. Provisions for repayment of dues in the resolution plan:
The resolution plan included provisions for repayment of CIRP costs, unsecured financial creditors, operational creditors, and government dues. The liquidation value of the corporate debtor was determined to be ?71,52,272.50 Lakhs.

6. Composition and intentions of the Resolution Applicant:
The Resolution Applicant comprised a consortium of three entities: Vyom Tele Infrastructure Private Ltd, Nucleus Energy Pvt. Ltd, and Saffron Broadcast & Media Ltd. The consortium intended to continue the business of the Corporate Debtor as a going concern and recover trade receivables.

7. Management and control of the Corporate Debtor post-approval of the resolution plan:
An Implementation and Monitoring Committee was proposed to manage the Corporate Debtor from the NCLT Approval Date until the Effective Date. The committee would include representatives from the CoC, RP, and Resolution Applicant.

8. Write-down of equity shares and restructuring of share capital:
The resolution plan proposed to write down the existing equity shares from INR 10 each to a face value of INR 1 each, reducing the share capital to about INR 10,00,000.

9. Compliance with Section 30 and 31 of the IBC and regulations 38 and 39 of CIRP Regulations:
The resolution plan was found to be in accordance with Sections 30 and 31 of the IBC and complied with Regulations 38 and 39 of the CIRP Regulations. The plan addressed the interests of all stakeholders and included provisions for effective implementation.

10. Judicial review and commercial wisdom of the CoC:
The Supreme Court in "K. Sashidhar vs. Indian Overseas Bank" held that the commercial decisions of the CoC are not open to judicial review. The NCLT and NCLAT cannot reverse the CoC's commercial decisions.

11. Approval and implementation of the resolution plan:
The NCLT approved the resolution plan, binding on all stakeholders. The RP was discharged from duties, and the moratorium was vacated. The resolution applicant was required to ensure compliance with applicable laws and obtain necessary approvals within one year from the date of the order.

Conclusion:
The resolution plan, having met all statutory requirements and approved by the CoC with the requisite majority, was approved by the NCLT. The RP was discharged, and the resolution applicant was directed to take control of the Corporate Debtor and ensure compliance with all applicable laws.

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