2018 (7) TMI 2263 - Tri - Insolvency and Bankruptcy

Seeking approval of the final resolution plan - Section 31 (1) of IBC - HELD THAT - On perusal of this entire resolution plan this Bench hereby noticed that this resolution plan has provided for payment of insolvency resolution process costs in the manner specified by the Board in priority to the repayment of the other debts of the Corporate Debtor provided for the repayment of debts of the operational creditors as per the waterfall mechanism mentioned under Section 53 of the Code provided for the management of the affairs of the corporate Debtor after the approval of the Resolution plan provided plan for payment to the creditors as mentioned in the resolution plan and this plan is not in contravention to any of the provisions of law for the time being in force with an undertaking that this plan will remain in conformity with the other requirements as specified by the Board. Application disposed off.

Issues Involved:
1. Approval of the Final Resolution Plan under Section 31(1) of the Insolvency & Bankruptcy Code, 2016.
2. Rights of Committee of Creditors (CoC) members and liabilities of existing promoters.
3. Exemption from stamp duty for actions in the Final Resolution Plan.
4. Distribution of amounts to financial creditors and operational creditors.
5. Management and control of the Corporate Debtor.
6. Restructuring arrangements including conversion of debt, reduction of share capital, merger, and slump sale.
7. Exemptions from SEBI approvals and stamp duty.
8. Treatment of mine rights and compliance with tax and government duties.

Detailed Analysis:

1. Approval of the Final Resolution Plan:
The application was filed under Section 31 read with Section 60(5) of the Insolvency & Bankruptcy Code, 2016 for the approval of the final resolution plan by the Tribunal. The plan was approved by the CoC with a 98.97% majority on April 9/10, 2018. The Tribunal approved the resolution plan after confirming compliance with Section 30(2) of the Code.

2. Rights of CoC Members and Liabilities of Existing Promoters:
The Tribunal ordered that the approval of the Final Resolution Plan shall not extinguish the rights of CoC members and the liability of existing promoters under personal guarantees, sureties, and indemnities. Any subrogation or other rights that the existing promoters may have against the Corporate Debtor or the transferee of assets shall be automatically waived and extinguished in full.

3. Exemption from Stamp Duty:
The Tribunal did not grant a blanket exemption from stamp duty. It clarified that the Corporate Debtor must comply with applicable laws regarding stamp duty and other approvals.

4. Distribution of Amounts to Financial and Operational Creditors:
The liquidation value of the Corporate Debtor was determined as ?2356.35 crores, which was insufficient to satisfy the secured financial creditors' claims in full. The resolution plan proposed an upfront payment of ?2457 crores to assenting secured financial creditors and conversion of ?215.20 crores into equity shares. The Tribunal approved the distribution of amounts as per the resolution plan and directed the Resolution Applicant to pay ?25 crores to operational creditors within one year from the order date.

5. Management and Control of the Corporate Debtor:
Until the Corporate Debtor is acquired by the Resolution Applicants, it will be managed by an Interim Board appointed by the Steering Committee approved by the CoC. This arrangement was approved by the Tribunal.

6. Restructuring Arrangements:
The Tribunal approved the following restructuring arrangements:
- Conversion of part debt into equity.
- Reduction of share capital by extinguishing the equity share capital held by existing promoters and proportionately reducing the equity share capital held by other shareholders.
- Merger of a Bidding Company with the Corporate Debtor, with the shareholding pattern as specified in the resolution plan.
- The Tribunal did not approve the slump sale of non-core assets as part of the resolution plan.

7. Exemptions from SEBI Approvals and Stamp Duty:
The Tribunal clarified that the Corporate Debtor must obtain all necessary approvals from SEBI and comply with applicable laws. No blanket exemptions were granted.

8. Treatment of Mine Rights and Compliance with Taxes:
The Tribunal held that mine rights should not be part of the resolution plan, and the Central Government will independently decide the rights related to mines. The Corporate Debtor must pay all taxes and government duties from the effective date of the plan.

Conclusion:
The application was disposed of with the approval and modifications mentioned above. The resolution plan was found to be in compliance with the Code and other applicable laws, and it provided for the payment of insolvency resolution process costs, repayment of debts to operational creditors, and management of the Corporate Debtor's affairs post-approval.

← Previous Next →