2020 (3) TMI 1296 - Tri - Insolvency and Bankruptcy

Seeking approval of the resolution plan - section 31 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - As the corporate debtor is a cash-generating entity, the mandatory operational creditor payments and MMB payments shall be paid in full out of the cashflows of the corporate debtor or if the cashflows are insufficient, through fresh fund infusion into the corporate debtor by way of equity, quasi equity, sub-ordinate debt and/or shareholder debt or a combination thereof from the balance-sheet of the resolution applicant, in priority to any payment to any financial creditor. It is clarified that mandatory operational creditor payments shall be made in accordance with the timelines prescribed by the Code and the MMB payments shall be made by the corporate debtor on the effective date - The applicant states, that the port is a critical national asset and it is absolutely imperative that this resolution plan be allowed in order to protect the interests of all the stakeholders including but not limited to the lenders of the corporate debtor. The applicant further states that he has examined the approved resolution plan received from APSEZ. As per the provisions of section 31(1) of the Code, the approved resolution plan is binding on all the stakeholder, employees, members, creditors and guarantors of the corporate debtor - Apart from the above, starting from the National Company Law Tribunal approval date till the effective date, the implementation and the monitoring committee shall be constituted and shall comprise of one nominee each of the resolution professional, the resolution applicant and the approving financial creditors. The resolution plan seeks all benefits and incentives, including but not limited to, under all such incentive schemes, subsidy schemes and policies that the corporate debtor is entitled under, and all such benefits shall remain vested in the corporate debtor with effect from the effective date. The aforesaid relief is allowed subject to provisions of the respective schemes and policies - The applicant has certified, as per regulation 39 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, that the contents of the resolution plan, as approved by the committee of creditors with more than 66 per cent. majority in favour, meets all the requirements of the I and B Code and the Regulations as applicable on the date thereof. The resolution applicant has declared that neither the resolution applicant nor any of its related parties have failed to implement or contribute to the failure of implementation of any other resolution plan approved by the Adjudicating Authority at any time in the past - 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 CoC has approved this resolution plan with 99.68 per cent. votes in favour of the resolution plan - the resolution plan is approved with modifications, as mentioned above, which shall be binding on the corporate debtor and its employees, members, creditors, guarantors, resolution applicant and other stakeholders involved in the resolution plan. The resolution plan is approved under section 31(1) of the I and B Code - application allowed.

Issues Involved:
1. Approval of the resolution plan under section 31 of the Insolvency and Bankruptcy Code, 2016.
2. Evaluation and selection of the resolution plan by the Committee of Creditors (CoC).
3. Compliance with the provisions of the Insolvency and Bankruptcy Code and CIRP Regulations.
4. Consideration of revised offers and settlement proposals.
5. Implementation and monitoring of the approved resolution plan.
6. Reliefs and concessions sought under the resolution plan.

Detailed Analysis:

1. Approval of the resolution plan under section 31 of the Insolvency and Bankruptcy Code, 2016:
The application filed by the resolution professional sought the approval of the resolution plan submitted by Adani Ports Special Economic Zone Ltd. (APSEZ). The resolution plan was approved by the CoC with 99.68% voting share. The Tribunal approved the resolution plan with certain modifications, making it binding on all stakeholders, including the corporate debtor, employees, members, creditors, guarantors, and the resolution applicant.

2. Evaluation and selection of the resolution plan by the Committee of Creditors (CoC):
The CoC evaluated resolution plans submitted by Jawaharlal Nehru Port Trust (JNPT), APSEZ, and Veritas Consortium. APSEZ’s plan scored the highest but was initially rejected. Subsequently, JNPT’s plan was approved but later JNPT expressed inability to accept modifications directed by the Tribunal. The CoC decided to reconsider all plans, and ultimately, APSEZ’s revised plan was approved by 99.68% of the CoC.

3. Compliance with the provisions of the Insolvency and Bankruptcy Code and CIRP Regulations:
The resolution professional confirmed that the resolution plan complied with the provisions of the Code and CIRP Regulations. APSEZ’s eligibility under section 29A of the Code was verified, and the plan included a statement under regulation 38(1A) of the CIRP Regulations addressing the interests of all stakeholders.

4. Consideration of revised offers and settlement proposals:
APSEZ submitted a revised offer of INR 650 crores, which could not be placed before the CoC as it was received after the approval of JNPT’s plan. The promoters of the corporate debtor also submitted a settlement offer of INR 680 crores, but it was not approved by the CoC. The CoC ultimately approved APSEZ’s revised plan.

5. Implementation and monitoring of the approved resolution plan:
An implementation and monitoring committee was constituted to supervise the day-to-day affairs of the corporate debtor until the effective date. The committee comprised nominees from the resolution professional, the resolution applicant, and the approving financial creditors. The plan outlined a payment schedule for different stakeholders, with financial creditors to receive INR 650 crores within 30 days of the effective date.

6. Reliefs and concessions sought under the resolution plan:
The resolution plan sought various reliefs, including extinguishment of tax liabilities and financial liabilities related to environmental and CRZ clearance non-compliance. The Tribunal allowed some reliefs but denied others, such as tax liability arising from the sub-concession agreement for berth development. The resolution applicant was required to comply with applicable laws and obtain necessary approvals.

Conclusion:
The Tribunal approved the resolution plan submitted by APSEZ with modifications, ensuring compliance with the Insolvency and Bankruptcy Code and CIRP Regulations. The approved plan included a detailed payment schedule and provisions for effective implementation, with specific reliefs and concessions granted as necessary. The resolution professional was directed to forward all records to the Insolvency and Bankruptcy Board of India (IBBI).

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