2019 (5) TMI 480 - Tri - Insolvency and Bankruptcy

Implementation of the Resolution Plan - reduction of capital - HELD THAT - The 'Resolution Plan' filed with the Application meets the requirements of Section 30(2) of I B Code, 2016 and Regulations 37, 38, 38(1A) and 39 (4) of IBBI (CIRP) Regulations, 2016. The 'Resolution Plan' is also not in contravention of any of the provisions of Section 29A. The Resolution Professional has also certified that the Resolution Plan approved by the CoCs does not contravene any of the provisions of the law for the time being in force. The Compliance Certificate is placed at pages 29 to 32 of the typed set filed with the Application. The 'Resolution Plan' annexed with MA/31/IB/2019 filed in CP/655/IB/2017 is hereby approved, which shall be binding on the Corporate Debtor and its employees, members, creditors, guarantors and other stakeholders involved in the Resolution Plan including Resolution Applicant. The Resolution Applicant shall pursuant to the Resolution Plan approved under Sub-section (1) of Section 31 of the I B Code, 2016, obtain all the necessary approval as maybe required under any law for the time being in force within a period of one year from the date of approval of the Resolution Plan by this authority or within such period as provided for in such law - the order of moratorium dated 03.04.2018 passed by this Adjudicating Authority under Section 14 of I B Code, 2016 shall cease to have effect from the date of passing of this Order.

Issues Involved:

1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016.
2. Objections raised by various stakeholders regarding the Resolution Plan.
3. Compliance with statutory requirements and regulations.
4. Implementation and effectiveness of the Resolution Plan.
5. Reliefs and permissions sought by the Resolution Applicant.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016:

The Resolution Professional filed MA/31/IB/2019 seeking approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016. The Tribunal noted that the Resolution Plan was approved by the Committee of Creditors (CoC) with 100% voting. The Resolution Plan submitted by H. M. Textiles Pvt. Ltd., Coimbatore aimed at settling the outstanding dues of Financial and Operational Creditors and ensuring the continuity of business operations for the Corporate Debtor, Subburaj Spinning Mills Pvt. Ltd.

2. Objections raised by various stakeholders regarding the Resolution Plan:

(i) Assistant Commissioner, Municipal Corporation, Tirunelveli:
The Assistant Commissioner requested the condonation of delay in filing their claim due to administrative hiccups. The Tribunal rejected this objection, stating that no claims can be entertained after the approval of the Resolution Plan by the CoC.

(ii) Chief Manager of ICICI Bank Ltd.:
ICICI Bank raised objections regarding the recognition of their claims in the Information Memorandum and the lack of provision in the Resolution Plan. The Tribunal rejected these objections, noting that ICICI Bank was aware of the CIR Process and had filed its claim after the approval of the Resolution Plan.

(iii) SKR Wind Energy, LLP:
SKR Wind Energy objected to the discriminatory treatment between Financial and Operational Creditors. The Tribunal referred to the Supreme Court ruling in K. Sashidhar v. Indian Overseas Bank, emphasizing the paramount status of the CoC's commercial wisdom. The objection was rejected.

(iv) Employees' State Insurance Corporation:
The Corporation objected to the ambiguity in the allocation of costs and the lack of clarity on interest payments. The Tribunal rejected the objection, noting that the provision made in the Resolution Plan was equivalent to the amount receivable in liquidation.

(v) Superintending Engineer, Electricity Distribution Circle, Tirunelveli:
The Engineer objected to the statutory dues. The Tribunal rejected this objection, noting that no claim was filed before the Resolution Professional.

3. Compliance with statutory requirements and regulations:

The Tribunal examined the Resolution Plan under Section 30(2) of the Insolvency and Bankruptcy Code, 2016, and Regulations 37, 38, 38(1A), and 39(4) of the IBBI (CIRP) Regulations, 2016. It was found compliant and not in contravention of any provisions of Section 29A. The Resolution Professional certified that the Resolution Plan did not contravene any laws in force.

4. Implementation and effectiveness of the Resolution Plan:

The Resolution Plan provided for the restructuring of debts, operational restructuring, capital restructuring, and infusion of fresh funds by the promoters. It also outlined the payment plan and manner of utilization, including payments to creditors within stipulated timeframes. The implementation of the Resolution Plan was to be monitored by City Union Bank as per Regulation 38(2)(c) of the IBBI (CIRP) Regulations.

5. Reliefs and permissions sought by the Resolution Applicant:

The Tribunal granted permission under Sections 66 and 42 of the Companies Act, 2013, for reduction of capital and private placement of securities. It also allowed the Corporate Debtor to carry forward accumulated business losses and unabsorbed depreciation. All statutory duties, including taxes and other liabilities due to operational creditors, were waived off to facilitate the successful implementation of the Resolution Plan.

Conclusion:

The Tribunal approved the Resolution Plan, making it binding on all stakeholders, including the Corporate Debtor, employees, members, creditors, guarantors, and others involved. The moratorium order ceased to have effect, and the Resolution Professional was directed to forward all records to the IBBI. The approved Resolution Plan became effective from the date of the order, and the Resolution Professional was instructed to send a copy of the order to all participants and the Resolution Applicant.

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