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2020 (3) TMI 1419 - Tri - Insolvency and BankruptcySeeking approval of Resolution Plan of Resolution Applicant - Section 31 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - It is found that the COC has approved the plan with 72.03% voting in favour of the approval of the plan. However, the only objection raised by Axis Bank is in view of recent amendment in Section 30(2)(b) that he is entitled for liquidation value at least, if not fair value - when there is no other objection in respect to the Resolution Plan and only one objection is raised by the dissenting Financial Creditor i.e. Axis Bank Limited, with regard to distribution on pro-rata basis, and in view of recent amendment, as well as, on the ground of reasonability and equity, the Axis Bank is entitled for liquidation value i.e. Rs. 8.60 crores, if not fair value i.e. Rs. 15.09 crores, as against pro-rata of Rs. 2.44 crores. The fair value of the asset and liquidation value of the asset (in crores) in respect of Solar Plant, upon which Axis Bank has exclusive charge, shows the disparity in the distribution. It is directed that the other Financial Creditors to contribute the remaining amount either on pro-rata basis and /or in proportion to the extent of their debt and/or as agreed by the other Financial Creditors, to the Axis Bank, so as to get atleast the liquidation value i.e. Rs. 8.06 crores, in view of the recent amendment made in Section 30 of the IB Code. By doing so, a going concern can be saved as the plan has been already approved by majority of voting share as such for disagreement in allocation of funds, the plan cannot be disturbed which has already been delayed. Any further delay, due to the dispute in allocation / distribution of the funds between the Financial Creditors will have far reaching consequences on the economy as a whole as well as it will be prejudicial to the interest of public and other stakeholders, workers, employees; whose livelihood is based on the Corporate Debtor. 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. However, one of the dissenting Financial Creditor made an objection with regard to the disparity in the distribution of amount on pro-rata basis which is not as per the amended Section 30 of the IB Code - Application allowed.
Issues Involved:
1. Approval of the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016. 2. Compliance with the requirements under Regulation 38 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 3. Distribution of amounts among creditors, particularly dissenting financial creditors. 4. Objection by Axis Bank regarding the distribution mechanism. 5. Concessions and reliefs sought by the Corporate Debtor. Issue-wise Detailed Analysis: 1. Approval of the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016: The Resolution Professional (RP) filed an application seeking approval of the Resolution Plan submitted by Parixit Irrigation Limited for Jaihind Projects Limited. The Committee of Creditors (CoC) approved the plan with 72.03% voting in favor. The RP confirmed that the Resolution Plan complies with the requirements of Section 30 of the IB Code and Regulation 38 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 2. Compliance with the requirements under Regulation 38 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016: The Resolution Plan was found to comply with the mandatory contents as per Regulation 38, which includes provisions for payment of insolvency resolution process costs, liquidation value to operational creditors, and dissenting financial creditors. The plan also addressed the interests of all stakeholders, including financial and operational creditors. 3. Distribution of amounts among creditors, particularly dissenting financial creditors: The total outstanding claims of financial creditors amounted to Rs. 1030.94 crores, with admitted claims by the RP being Rs. 993.00 crores. The plan proposed a One Time Settlement (OTS) of Rs. 53.00 lakhs for financial creditors, to be paid within 90 days from the approval of the Resolution Plan by NCLT. The distribution ratio among financial creditors was to be decided by the CoC. 4. Objection by Axis Bank regarding the distribution mechanism: Axis Bank, a dissenting member of the CoC, objected to the distribution mechanism, arguing that it was entitled to at least the liquidation value of Rs. 8.60 crores for the asset exclusively charged to it (Solar Project) as per Section 30(2)(b) of the IB Code. The bank contended that it was provided only Rs. 2.44 crores on a pro-rata basis, which was substantially lower than the liquidation value. The Tribunal directed that Axis Bank should receive at least the liquidation value of Rs. 8.60 crores, and other financial creditors should contribute the remaining amount on a pro-rata basis. 5. Concessions and reliefs sought by the Corporate Debtor: The Tribunal addressed various concessions and reliefs sought by the Corporate Debtor. It allowed certain reliefs, such as those under Part G (1) sub-clause (c) from the Government of Gujarat. For other concessions, the Tribunal directed the Resolution Applicant to approach the concerned statutory or competent authorities. The Tribunal also clarified that approval of the Resolution Plan does not mean automatic waiver or abetment of pending legal proceedings. Findings: The Tribunal found that the CoC approved the plan with 72.03% voting in favor and that the Resolution Plan complied with the mandatory contents as per Regulation 38. The Tribunal directed that Axis Bank should receive at least the liquidation value of Rs. 8.60 crores, and other financial creditors should contribute the remaining amount on a pro-rata basis. The Tribunal emphasized that the approval of the Resolution Plan should not be delayed further to save the Corporate Debtor as a going concern. Conclusion: The Tribunal approved the Resolution Plan with the above observations and directions, allowing IA 593 of 2019 and disposing of the application accordingly. The CoC/Financial Creditors were directed to convene a meeting to resolve the issue of distribution to Axis Bank within 15 days from the date of availability of the order online.
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