2020 (7) TMI 766 - Tri - Insolvency and Bankruptcy

Approval of Resolution Plan - Section 30(6) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 39 (4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT - This Authority giving credence to the commercial decision of the COC in approving the Resolution Plan has perused the Resolution Plan in light of the same. Further, it is seen that the Resolution Applicant has sought for Relief and Concessions in the Resolution Plan. The Liquidation Value of the Corporate Debtor as per Form H filed by the Resolution Professional is arrived at ₹ 155 Crores and the Resolution Plan provides for an amount of ₹ 368.50 Crores payable to all the stakeholders (excluding ₹ 0.50 Crores of CIRP costs), which is much more than the Liquidation value. Since prima facie, there are no inconsistency in relation to the Resolution plan vis-a-vis the provisions of section 30(2) of IBC, 2016, the Resolution Plan is hereby approved and it shall be binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immediate effect and the Moratorium imposed under section 14 of IBC, 2016 at the time of initiation of CIRP shall not have any effect henceforth. The Resolution Professional shall submit the records collected during the commencement of the Proceedings to the Insolvency Bankruptcy Board of India for their record and also return thereafter to the Resolution Applicant or New Promoters. Application filed by the Resolution Professional for the approval of the Resolution Plan stands allowed.

Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code (IBC), 2016.
2. Compliance with procedural requirements and timelines of the Corporate Insolvency Resolution Process (CIRP).
3. Evaluation and approval of the Resolution Plan by the Committee of Creditors (CoC).
4. Legal disputes and objections regarding the Resolution Plan.
5. Distribution of resolution funds among creditors.
6. Reliefs and concessions sought by the Resolution Applicant.
7. Role and responsibilities of the Monitoring Committee.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code (IBC), 2016:
The application MA/1433/2019 was filed by the Resolution Professional (RP) seeking approval of the Resolution Plan submitted by UV Asset Reconstruction Company Limited and WL Structures Private Limited. The Tribunal approved the Resolution Plan, noting compliance with Section 30(6) of the IBC, 2016, and Regulation 39(4) of the CIRP Regulations.

2. Compliance with procedural requirements and timelines of the Corporate Insolvency Resolution Process (CIRP):
The CIRP was initiated against the Corporate Debtor following an application by a Financial Creditor under Section 7 of the IBC, 2016. The RP published Form G and invited Expressions of Interest (EOI), extending deadlines to accommodate more EOIs. Despite delays, extensions were granted, and procedural compliance was maintained.

3. Evaluation and approval of the Resolution Plan by the Committee of Creditors (CoC):
The CoC evaluated multiple EOIs and resolution plans. RPG Asset Management Pvt. Ltd. was disqualified for non-compliance, leaving UVARC as the sole resolution applicant. After several revisions and deliberations, the CoC approved the Resolution Plan with 67.97% voting in favor.

4. Legal disputes and objections regarding the Resolution Plan:
Several legal disputes arose, including RPG's disqualification and objections by IIFCL Mutual Funds regarding the distribution of resolution funds. The Tribunal dismissed RPG's claims and rejected IIFCL's application (MA/99/2020), citing the paradoxical stance of approving the plan while challenging fund distribution.

5. Distribution of resolution funds among creditors:
The Resolution Plan proposed payments towards various claims, including IRP costs, workmen and employee dues, operational creditors, and financial creditors. The total admitted claims of financial creditors amounted to ?2271.08 Crores, with a proposed settlement of ?352 Crores. The plan ensured that dissenting financial creditors received at least the liquidation value.

6. Reliefs and concessions sought by the Resolution Applicant:
The Resolution Applicant sought various reliefs and concessions, including the carry-forward of accumulated business losses and waiver of liabilities related to joint ventures and subsidiaries. The Tribunal directed the applicant to seek necessary approvals from relevant authorities, referencing the Supreme Court's judgment in Embassy Property Developments Pvt. Ltd. vs. State of Karnataka.

7. Role and responsibilities of the Monitoring Committee:
The Monitoring Committee, consisting of representatives of financial creditors and the RP, was established to oversee the implementation of the Resolution Plan. The RP was directed to hand over all records and documents to the Resolution Applicant to facilitate the revival of the Corporate Debtor.

Conclusion:
The Tribunal approved the Resolution Plan submitted by UV Asset Reconstruction Company Limited and WL Structures Private Limited, finding it compliant with the IBC, 2016, and the CIRP Regulations. The plan was deemed feasible and viable, ensuring fair distribution among creditors and addressing legal disputes. The Monitoring Committee was tasked with overseeing the plan's implementation, marking the revival of the Corporate Debtor.

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