2020 (8) TMI 897 - Tri - Insolvency and Bankruptcy

Seeking approval of the Resolution Plan - Section 31 of I B Code, read with regulation 39, of the Insolvency and Bankruptcy Board of India, (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT - In respect of compliance of Section 30(2)(a), of the Code, it is seen that there is a provision in the resolution plan Chapter VI clause 6.1 provides for payment of CIRP costs in priority over payments to any other creditors. Be that as it may it is made clear that Insolvency Resolution Process cost shall be paid in its entirety by the resolution applicant in priority to other debts of the corporate debtor - As regards compliance of clause (b) of Section 30 (2) of the Code, the Resolution Professional has certified that clause 6.20f the resolution plan provides for the payment of the debts of operational creditors in such manner as may be specified by the Board (IBBI) which shall not be less than the amount to be paid to the operational creditors in the event of a liquidation of the corporate debtor under Section 53. There appears to be no discrimination in the resolution plan in respective class of creditors, as same treatment is provided to similarly situated each class of creditors. So long as the provisions of the Code and the Regulations have been met, it is the commercial wisdom of the requisite majority of the Committee of Creditors which is to negotiate and accept a resolution plan, which may involve differential payment to different classes of creditors. Needless to say, that the ultimate discretion of what to pay and how much to pay each class or subclass of creditors is with the Committee of Creditors. Equitable treatment has been accorded to each creditor depending upon the class to which it belongs. It is seen that clause (b) of sub-section (2) of Section 30 of the Code stands satisfied. In terms of Section 30(2)(c), the Resolution Plan provides for management of affairs of the corporate debtor after approval of the Resolution Plan. The management of the affairs and control of the business of the corporate debtor after approval of the Resolution Plan has been provided at clause 10.3 of the Resolution plan which, inter alia, provides that the Company shall continue as a going concern and operate in its normal course of business upon implementation of the Resolution Plan. Chapter 10 clause IV of the Resolution Plan provides for adequate means for supervising its implementation that fulfills the requirement envisaged by Section 32(2)(d) of the Code. It has been stated that one representative of Lenders alongwith two representatives of resolution applicant shall act as the monitoring agency. The Resolution Plan is approved - application allowed.

Summary

Issues Involved:
1. Approval of the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016.
2. Compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016.
3. Consideration of objections and applications for withdrawal of the Corporate Insolvency Resolution Process (CIRP).
4. Payment and settlement terms for various classes of creditors.
5. Implementation and monitoring of the approved Resolution Plan.

Detailed Analysis:

1. Approval of the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016:
The application was filed by the Resolution Professional seeking approval of the Resolution Plan for the corporate debtor, M/S. JNC Constructions Private Limited. The Resolution Plan was submitted by M/s. Gautam Builders in consortium with Rapid Contracts Pvt. Ltd. and was approved by the Committee of Creditors (CoC) with 96.07% votes. The Tribunal approved the Resolution Plan under Section 31(1) of the Code, noting that all requirements of Section 30(2) were fulfilled and no provisions of the law were contravened.

2. Compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016:
The Resolution Professional confirmed that the Resolution Plan complied with Section 30(2) of the Code, including:
- Section 30(2)(a): The plan provided for payment of CIRP costs in priority over other debts.
- Section 30(2)(b): The plan ensured payment to operational creditors as per the liquidation value.
- Section 30(2)(c): Management of the corporate debtor post-approval was outlined, ensuring the company would continue as a going concern.
- Section 30(2)(d): Adequate means for supervising the implementation of the plan were provided.
- Section 30(2)(e): The plan did not contravene any provisions of the law in force.
- Section 30(2)(f): The plan adhered to all applicable laws.

3. Consideration of objections and applications for withdrawal of the Corporate Insolvency Resolution Process (CIRP):
The ex-director filed an application (I.A. 1802 (PB)/ 2020) for withdrawal of the CIRP based on a settlement, which was rejected. The Tribunal noted that the settlement conditions were not fulfilled, and the plan had already been approved by the CoC. The objections raised by the suspended director were found to be without merit, and the application was dismissed.

4. Payment and settlement terms for various classes of creditors:
The approved Resolution Plan detailed the payment terms for different classes of creditors:
- CIRP Costs: 100% payment within 90 days from the effective date.
- Secured Financial Creditors: 2% payment in 10 equal quarterly installments after two years.
- Operational Creditors: 60% payment after project completion.
- Employees: 60% payment within 90 days.
- Statutory Dues: 10% payment in line with payments to other authorities.
- Homebuyers: Various terms including delay penalties and no additional charges for increased area/FAR.

5. Implementation and monitoring of the approved Resolution Plan:
The plan provided for a monitoring committee consisting of representatives from lenders and the resolution applicant. The Tribunal granted liberty to the monitoring committee to seek further directions if necessary. The Resolution Professional was directed to forward all records to the Insolvency and Bankruptcy Board of India (IBBI).

The approved Resolution Plan became effective from the date of the order, and the Resolution Applicant was directed to adhere to all applicable laws and obtain necessary approvals within one year.

Conclusion:
The Tribunal approved the Resolution Plan submitted by M/s. Gautam Builders in consortium with Rapid Contracts Pvt. Ltd., ensuring compliance with the Insolvency and Bankruptcy Code, 2016, and addressing the objections and applications for withdrawal. The detailed payment and settlement terms for various creditors were outlined, and provisions for the implementation and monitoring of the plan were established.