2021 (6) TMI 1124 - Tri - Insolvency and Bankruptcy

Rejection of Resolution Plan - Section 60(5) read with 31(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - It is seen that the present IA has been filed by 14 applicants. The counsel for RP has been able to prove that effectively (after excluding the applicants under joint names and those being not FC) there are only 7 applicants who had opposed to the approval of Resolution Plan, and this constitutes a miniscule proportion of the total number of FCs in class. This has not been controverted by the Counsel for Applicants herein. It is also seen that the Resolution Plan has been approved by 99.97 % of voting share of CoC. On this count we agree with submission of Counsel for RP that the applicants herein do not have locus standi to file the instant application - the Plan of Resolution Applicant was received on 15.10.2019, which is within the time frame fixed by CoC in the RFRP. However, the plan as received can always be subject to negotiations between RA and the CoC in the best commercial wisdom of CoC. Therefore, the contention of Applicant on this count, being devoid of merit, is rejected. Seeking approval of Resolution Plan - section 31(1) of IBC - HELD THAT - The resolution plan filed with the Application meets the requirements of section 30 and 31 of IBC, 2016 and Regulation 37, 38, 38(1A) and 39(4) of the IBBI(CIRP) Regulations, 2016. The provisions of Section 29A of IBC are not attracted as declared by the resolution applicant. The RP has also verified that the Resolution Plan approved by the CoC does not contravene any of the provisions of the law for the time being in force. The RP has filed compliance certificate in Form H as required under regulation 39(4) of the IBBI (CIRP) Regulations, 2016. The Resolution Plan for Copia, Sapphire and Techone is hereby approved and the objection raised by the HDFC Bank against the Resolution Plan stands rejected, shall be binding on the corporate debtor and its employees, members, creditors, guarantors, other stakeholders including statutory authorities and the Resolution Applicant - Application allowed.

Summary

Issues Involved:
1. Legality and compliance of the resolution plan submitted by Alpha Corp Development Private Limited.
2. Objections by applicants regarding the resolution plan.
3. Approval of the resolution plan under Section 30(6) and 31(1) of the Insolvency and Bankruptcy Code, 2016.
4. Objection by HDFC Bank against the resolution plan.

Detailed Analysis:

1. Legality and Compliance of the Resolution Plan Submitted by Alpha Corp Development Private Limited:
The applicants, who are homebuyers and financial creditors of the corporate debtor (CD), filed an application under Section 60(5) read with 31(2) of the Insolvency and Bankruptcy Code, 2016, seeking directions regarding the resolution plan submitted by Alpha Corp Development Private Limited. They argued that the resolution plan did not comply with Section 30 of the Code and requested its rejection. The resolution professional (RP) countered that the plan was approved by 99.97% of the Committee of Creditors (CoC) and that the applicants had actively participated in the resolution process, thus lacking the locus standi to challenge the plan.

2. Objections by Applicants Regarding the Resolution Plan:
The applicants raised several objections, including:
- The complexity and extensive nature of the resolution plan, making it difficult to analyze within the given time.
- The absence of an exit route for dissenting homebuyers.
- The transfer of assets worth over Rs. 1000 crores to a newly formed SPV without adequate safeguards.
- The resolution plan not providing for various compliances mandated under Section 30(2) of the Code.
- Insufficient time given to analyze the resolution plan.

The tribunal found that the resolution plan could include provisions for restructuring, including merger, amalgamation, and demerger, as per the Explanation to Section 5(26) of the Code. It also noted that the resolution plan complied with Section 30(2) of the IBC and CIRP Regulation 38. The tribunal rejected the applicants' objections, stating that sufficient time was provided to the class of creditors to analyze the plan.

3. Approval of the Resolution Plan under Section 30(6) and 31(1) of the Insolvency and Bankruptcy Code, 2016:
The RP filed an application seeking approval of the resolution plan for the remaining projects, namely Earth Copia Project, Earth Sapphire Project, and Earth Techone Project. The resolution plan was approved by the CoC with a 99.97% majority. The tribunal found that the resolution plan met the requirements of Sections 30 and 31 of the IBC, 2016, and Regulation 37, 38, 38(1A), and 39(4) of the IBBI (CIRP) Regulations, 2016. The tribunal approved the resolution plan and directed the RP to forward all records to the IBBI.

4. Objection by HDFC Bank Against the Resolution Plan:
HDFC Bank, a secured financial creditor, objected to the resolution plan, arguing that it was being discriminated against as other financial creditors were receiving 100% of their debt while it was getting only 35%. The RA responded that the payment proposed to HDFC was more than what it would receive in liquidation. The tribunal rejected HDFC's objection, stating that the RA had satisfactorily addressed the issues raised and that the payment proposed was in compliance with the Code.

Conclusion:
The tribunal rejected the application filed by the applicants challenging the resolution plan and approved the resolution plan submitted by Alpha Corp Development Private Limited for the three projects. The objections raised by HDFC Bank were also rejected. The order of moratorium dated 06.06.2018 ceased to have effect from the date of the order, and the RP was directed to forward all records to the IBBI. The approved resolution plan became effective from the date of the order.