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2018 (9) TMI 54 - Tri - Insolvency and BankruptcyCorporate Insolvency Resolution Process - approval of resolution plan - Held that - This Bench power to interfere with the statutory right of the CoC to either approve or reject a resolution plan by a vote of not Les than 75% of voting share of the financial creditors it is liable to approve the resolution plan which was approved with 100% voting share and meets the requirements of sub section (2) of section 30 of the I&B Code. In view of the above, and upon finding that none of the objections raised by any of the objectors against the Resolution Plan submitted by CP Ispat Private Limited stand proved with supporting evidence, it appears to me that the resolution plan of CP Ispat Pvt. Ltd is to be approved as per Sub-Section (1) of Section 31 of the I&B Code 2016. Accordingly, the Resolution Plan submitted by CP Ispat Private Limited is hereby approved upon the following directions 1. It shall be binding on the corporate debtor and its employees, members, creditors, guarantors, and other stakeholders involved in the resolution plan. 2. The resolution plan of the corporate debtor shall come into force with immediate effect. 3. The moratorium order passed under Section 14 shall cease to have effect. 4. The Resolution Professional shall forward all records relating to the conduct of the Corporate Insolvency Resolution Process and the Resolution Plan to the Insolvency and Bankruptcy Board of India to be recorded on its database. 5. A copy of this order is to be forwarded to IBBI.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP). 2. Approval and submission of the Resolution Plan. 3. Allegations of irregularities and confidentiality breaches by the Resolution Professional. 4. Rejection of resolution plans by the Committee of Creditors (CoC). 5. Fixation of insolvency resolution costs and fees of the Resolution Professional. Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process (CIRP): The application was filed by Punjab National Bank under Section 7 of the Insolvency and Bankruptcy Code 2016, seeking to initiate CIRP against Divyajyoti Sponge Iron Ltd. The application was admitted on 23rd August 2017, and Mr. Arun Kumar Gupta was appointed as the Interim Resolution Professional (IRP), later becoming the Resolution Professional (RP) on 24th October 2017. The 180-day period for submitting a resolution plan expired on 19th February 2018, and the RP submitted the resolution plan on time. 2. Approval and Submission of the Resolution Plan: The RP convened eight meetings of the CoC, called for claims from stakeholders, and after due deliberation, a resolution plan was approved by the CoC and submitted on the last day of the 180-day period. The final report of the RP was based on the resolution plan of CP Ispat Private Limited, approved by the CoC with a 100% voting share in the meeting held on 14th February 2018. 3. Allegations of Irregularities and Confidentiality Breaches by the Resolution Professional: Two other resolution applicants, whose claims were rejected by the CoC, filed applications challenging the approved resolution plan. One applicant, Omkara Infraprojects Private Limited, alleged serious irregularities, including the breach of confidentiality by the RP, who allegedly disclosed their bid amount to another applicant. However, the Tribunal found no merit in these allegations, noting that the RP met all the requirements of Sub-Section (2) of Section 30 of the I&B Code, 2016, and provided the necessary certification under Regulation 39(4)(a) of the IBBI Regulations, 2016. 4. Rejection of Resolution Plans by the Committee of Creditors (CoC): The CoC rejected the resolution plans of Omkara Infraprojects Private Limited and Prakash Jain of Simplex Credits and Industries Ltd. The CoC decided not to consider any plans submitted after the cut-off date of 2nd February 2018 to maintain the sanctity of the resolution process. The Tribunal emphasized that the right to approve or reject a plan lies with the CoC, and the Tribunal's role is to ensure compliance with the requirements of Sub-Section (2) of Section 30 of the I&B Code. The Tribunal found that the CoC's decisions were unanimous and devoid of any irregularities. 5. Fixation of Insolvency Resolution Costs and Fees of the Resolution Professional: The Tribunal noted concerns about the fixation of exaggerated insolvency resolution costs and fees of the RP. The CoC approved a lump sum fee of ?7,50,000 and other costs without considering the volume, nature, and complexity of the CIRP. The Tribunal highlighted the need for legitimate guidelines or regulations to ensure that the resolution costs are not unreasonable and safeguard the prospects of the revival of a dying corporate debtor. Conclusion: The Tribunal approved the resolution plan submitted by CP Ispat Private Limited under Sub-Section (1) of Section 31 of the I&B Code, 2016, as it met all the statutory requirements and was approved by the CoC with a 100% voting share. The Tribunal directed that the resolution plan be binding on all stakeholders and that the moratorium order cease to have effect. The RP was instructed to forward all records to the Insolvency and Bankruptcy Board of India (IBBI) for recording in its database. The Tribunal also called for the framing of necessary regulations or guidelines regarding the fixation of fees and resolution costs by a resolution professional.
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