2019 (1) TMI 1959 - Tri - Insolvency and Bankruptcy

Seeking approval of this Tribunal to the final/revised Resolution Plan submitted by Tri-county Premier Hearing Services Inc, Resolution Applicant (RA) - section 60(5)(c) read with section 30(6) of Insolvency and Bankruptcy Code, 2016 - HELD THAT - The Plan seeks approval of this Tribunal to the effect that post the approval of the resolution plan by this Tribunal, no re-assessment/revision or any other proceedings under the provisions of the Income Tax Act or any other statutory Act should be initiated on the Company in relation to period prior to acquisition of control by the RA and any consequential demand should be considered non-existing and as not payable by the Company. Any proceedings which were kept in abeyance in view of process under the code or otherwise should not be revived post the order of this Tribunal. The Income Tax Department to grant exemption from the applicability of provisions of section 79, section 41(1) and section 28 of Income Tax Act 1961 in relation to the Plan. The said reliefs cannot be granted and are hereby rejected. The Plan further seeks immunity from any actions and penalties (of any nature) under any law for any non-compliance of laws in relation to the Company or by the Company, which was existing as on the date of acquisition of control by the Resolution Applicant over the Company and which continues for a period of upto 12 months after the acquisition of control by the Resolution Applicant over the Company. The said reliefs cannot be granted and are hereby rejected - Plan also seeks immunity for the RA and the Company from any actions and penalties (of any nature) under any law for any non-compliance of laws in relation to the Company or by the Company, which was existing as on the Completion Date and which continues for a period of upto 12 months after the acquisition of control by the RA over the Company. The said reliefs cannot be granted and are hereby rejected. The resolution plan is approved with modifications, as mentioned above, which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan - moratorium order under section 14 shall cease to have effect from the date of this order.

Summary

Issues Involved:
1. Approval of the final/revised Resolution Plan.
2. Initiation of Corporate Insolvency Resolution Process (CIRP).
3. Rejection of the initial Resolution Plan and subsequent liquidation application.
4. Revised Resolution Plan consideration and approval by the Committee of Creditors (CoC).
5. Compliance with Section 30(2) of the Insolvency and Bankruptcy Code (IBC).
6. Mode of financing and stakeholders' interests.
7. Reliefs and exemptions sought by the Resolution Applicant (RA).
8. Appointment and role of Monitoring Agency.
9. Withdrawal of liquidation application.
10. Binding nature and implementation of the Resolution Plan.

Detailed Analysis:

1. Approval of the final/revised Resolution Plan:
The application M.A. 1352/2018 was filed by the Resolution Professional (RP) seeking approval for the final/revised Resolution Plan dated 05.11.2018 submitted by Tri-county Premier Hearing Services Inc. The Tribunal approved the plan with modifications, making it binding on all stakeholders involved.

2. Initiation of Corporate Insolvency Resolution Process (CIRP):
The CIRP was initiated against BSR Diagnostic Limited upon a petition filed by Axis Bank Limited under section 7 of the IBC. The Tribunal admitted the petition on 29.09.2017. The RP was appointed, and the CIRP period was extended by an additional 90 days.

3. Rejection of the initial Resolution Plan and subsequent liquidation application:
The initial Resolution Plan submitted by Tri-county Premier Hearing Services Inc. was rejected due to lack of requisite majority in the CoC meeting. Consequently, the RP filed an application for liquidation of the Corporate Debtor, which was opposed by the RA and the suspended Promotor/Director.

4. Revised Resolution Plan consideration and approval by the CoC:
State Bank of India, a significant financial creditor, initially voted against the plan but later accepted the revised offer. The final revised plan was approved by the CoC with a 99.4758% majority.

5. Compliance with Section 30(2) of the IBC:
The RP confirmed that the final resolution plan complied with Section 30(2) of the IBC, addressing the payment of insolvency resolution process costs, debts of operational creditors, management of the Corporate Debtor, and implementation and supervision of the plan.

6. Mode of financing and stakeholders' interests:
The plan proposed various modes of financing, including equity infusion, long-term loans, and internal accruals. The interests of different stakeholders, such as secured and unsecured financial creditors, operational creditors, government dues, and workmen/employees, were addressed with specific payment methodologies.

7. Reliefs and exemptions sought by the RA:
The RA sought several reliefs and exemptions, including immunity from actions and penalties under various laws and exemptions from certain Income Tax provisions. The Tribunal rejected these reliefs, stating that such liabilities are commercial risks that the RA must undertake.

8. Appointment and role of Monitoring Agency:
The plan proposed the appointment of a Monitoring Agency within 30 business days to supervise the implementation of the resolution plan. The Tribunal directed the composition of the Monitoring Agency and allowed the RA to substitute it with prior approval if necessary.

9. Withdrawal of liquidation application:
Considering the approval of the final resolution plan, the RP filed an application for the withdrawal of the liquidation application, which was allowed by the Tribunal.

10. Binding nature and implementation of the Resolution Plan:
The Tribunal approved the resolution plan with modifications, making it binding on the Corporate Debtor and all stakeholders. The moratorium order ceased to have effect, and the RP was directed to forward all records to the Insolvency and Bankruptcy Board of India (IBBI).

The Tribunal concluded by approving the resolution plan under section 31(1) of the IBC, with modifications, and disposed of all related applications accordingly.