2020 (10) TMI 1279 - Tri - Insolvency and Bankruptcy

Seeking approval of Resolution Plan - Section 31 of the IB Code - HELD THAT - It is found that the COC has approved the plan with 100% voting in favour of the plan. More so, the Resolution Applicant fulfils the mandatory contents of the Resolution Plan as provided under Regulation 38 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016. From the object of the IBC, it is amply clear that the Resolution is Rule and the Liquidation is an Exception . Liquidation brings the life of a corporate to an end. It destroys organizational capital and renders resources idle till reallocation to alternate uses. Further, it is inequitable as it considers the claims of a set of stakeholders only, if there is any surplus after satisfying the claims of a prior set of stakeholders fully. The IB Code , therefore, does not allow liquidation of a corporate debtor directly. It allows liquidation only on failure of corporate insolvency resolution process . It rather facilitates and encourages resolution in several ways. The Adjudicating Authority is of the opinion that not allowing the Clause 19(xv) i.e. Reliefs and Concessions sought by the Resolution Applicants of the Resolution Plan, is not going to make any hindrance for proper implementation of the Resolution Plan as those are the subject matter of the concerned /appropriate Competent Authorities - the Adjudicating Authority, is of the considered opinion and also being satisfied that the Resolution Plan as approved by the Committee of Creditors (CoC) meets the requirements as referred to under section 30(2) of the Code. Resolution plan approved - application allowed.

Summary

Issues Involved:

1. Approval of the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code (IBC), 2016.
2. Consideration of reliefs and concessions sought by the Resolution Applicants.
3. Withdrawal of the Resolution Plan under Section 60(5) of the IBC, 2016.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan under Section 31 of the IBC, 2016:

The application was filed under Section 30(6) of the IBC, 2016, seeking approval of the Resolution Plan submitted by the Resolution Applicants. The Corporate Insolvency Resolution Process (CIRP) was initiated on 17.08.2018, and the Interim Resolution Professional (IRP) was appointed. The Committee of Creditors (CoC) approved the revised Resolution Plan in its 5th meeting on 10.05.2019 with 100% voting. The Resolution Plan was found to comply with the requirements under Regulation 38 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, and Section 30 of the IBC. The Tribunal noted that the Resolution Applicant had considered the interests of all stakeholders and prioritized the clearance of dues. The total amount proposed for the Resolution Plan costs was ?6,79,22,000/-.

2. Consideration of reliefs and concessions sought by the Resolution Applicants:

The Tribunal observed that not allowing Clause 19(xv) (reliefs and concessions sought by the Resolution Applicants) would not hinder the implementation of the Resolution Plan. The Resolution Applicants were directed to approach competent authorities for any concessions or reliefs required. The Tribunal emphasized that the approval of the Resolution Plan does not imply automatic waiver or abetment of pending legal proceedings. The Resolution Applicants were advised to seek appropriate reliefs from relevant authorities.

3. Withdrawal of the Resolution Plan under Section 60(5) of the IBC, 2016:

The application for withdrawal of the Resolution Plan was filed under Section 60(5) of the IBC, 2016, citing outdated financial information and the impact of COVID-19. The Tribunal found the applicant's claim of unawareness of the financial condition unconvincing, as the Corporate Debtor was an MSME, and the plan was prepared considering its financial state. Citing the judgment in Kundan Care Products Ltd vs. Mr. Amit Gupta Resolution Professional and Ors, the Tribunal noted that there is no provision in the IBC allowing withdrawal of an approved Resolution Plan. Additionally, the application lacked clarity regarding the relief sought, leading to its dismissal with a cost of ?50,000/- to be paid to the PM CARES Fund.

Conclusion:

The Tribunal approved the Resolution Plan under Section 31 of the IBC, 2016, noting compliance with relevant regulations and the CoC's unanimous approval. Reliefs and concessions sought by the Resolution Applicants were directed to be pursued with competent authorities. The application for withdrawal of the Resolution Plan was dismissed due to lack of clarity and legal provisions supporting such withdrawal.