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2019 (6) TMI 419 - Tri - IBCInitiation of Corporate Insolvency and Resolution Process - Corporate Debtor - approval of a Resolution Plan - Appointment of Resolution Plan. HELD THAT - The Resolution Plan as approved by the Committee of Creditors is by and large hereby sanctioned by this Order in view of the recent judgement of the apex court in K Sashidhar Indian Overseas Bank ors. 2019 (2) TMI 1043 - SUPREME COURT . The Hon ble Supreme Court in the said order has made the role of COC quite vital for deciding the fate of the company. It has been held that the Adjudicating authority is not required to go into the merits or reasoning of the decision taken by the COC for approval or rejection of a resolution plan. The only benchmark which is set up to be determined by the AA is to see whether the plan has been approved by 75% voting of the COC or not. Therefore the commercial wisdom is not allowed to be interfered with. The approval of a Resolution Plan by the CoC is to be accepted in toto by the Adjudicating authority if a 66% voting share approves the said plan. Because of the latest decision the scope of any suggestion or alteration in the impugned resolution plan is very limited. As far as the procedure is concerned in this case the same has been followed as per the provisions of the Insolvency Code therefore the Resolution Plan has to be approved. The Resolution Applicant has submitted an affidavit as required U/s 30(1) of the Code stating that he is eligible U/s 29A of the Code. The Resolution Plan is binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immediate effect and the Moratorium imposed under section 14 shall cease to have any effect henceforth.
Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016. 2. Appointment and substitution of Insolvency Resolution Professionals (IRP). 3. Eligibility of the Resolution Applicant under Section 29A and Section 240A(1) of the I&B Code. 4. Deliberations and modifications in the Resolution Plan. 5. Salient features and financial details of the Resolution Plan. 6. Qualifications and conditions imposed by the Tribunal on the Resolution Plan. 7. Compliance with the procedural and substantive requirements of the Insolvency & Bankruptcy Code. Detailed Analysis: 1. Approval of the Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016: An application was moved by the Resolution Professional for approval of a Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016, read with Regulation 39(4) of the Insolvency Resolution Process for Corporate Persons, 2016. The Tribunal passed an order as prescribed under Section 31(1) of the Code. 2. Appointment and substitution of Insolvency Resolution Professionals (IRP): The Operational Creditor filed a petition under Section 9 of the Code against the Corporate Debtor. Initially, Mr. Sudip Bhattacharya was appointed as IRP. He was later replaced by Mr. Martin Golla, and subsequently by Mr. Dhiren Shantilal Shah due to disciplinary actions against Mr. Golla. An exclusion of 29 days from the Corporate Insolvency Resolution Process period and an extension of 90 days were granted. 3. Eligibility of the Resolution Applicant under Section 29A and Section 240A(1) of the I&B Code: The Resolution Applicant, comprising Mr. Anand Prakash Choudhari and Mrs. Manju Choudhari, submitted a Resolution Plan. Their eligibility under Section 29A read with Section 240A(1) was affirmed, making them qualified Resolution Applicants. The Tribunal noted that the default was due to factors beyond the control of the erstwhile management. 4. Deliberations and modifications in the Resolution Plan: The Resolution Plan was placed before the Committee of Creditors (CoC) and approved with 87.88% voting in favor. The Corporate Debtor being an MSME, the promoters/directors were not disqualified under Section 29A due to the application of Section 240A. 5. Salient features and financial details of the Resolution Plan: The Resolution Plan included detailed financial restructuring, repayment schedules, and operational strategies. It proposed various measures such as reducing credit limits, restructuring loans, and providing additional collateral. The plan also included the continuation of existing shareholding patterns and the appointment of new management. 6. Qualifications and conditions imposed by the Tribunal on the Resolution Plan: - Rent Payment: The proposed rent of ?80,000/- to Mrs. Manju Choudhari was restricted. Instead, a monthly salary of ?25,000/- was approved for her services. - CIRP Cost: The proposed Corporate Insolvency Resolution Process Cost of ?9.36 Crores was deemed exorbitant and reduced to ?2.00 Crores. The surplus was to be distributed among Operational Creditors. - Director's Salary: The proposed salary of ?3,00,000/- for Mr. A.P. Choudhari was reduced to ?1,50,000/-, and ?50,000/- was approved for Mrs. Manju Choudhari. 7. Compliance with the procedural and substantive requirements of the Insolvency & Bankruptcy Code: The Tribunal emphasized the importance of recording "satisfaction" in writing after a thorough examination of the Resolution Plan. The Tribunal referred to the Supreme Court judgment in K Sashidhar & Indian Overseas Bank, highlighting that the Adjudicating Authority should not interfere with the commercial wisdom of the CoC if the plan is approved by the requisite majority. Conclusion: The Resolution Plan, as approved by the Committee of Creditors, was sanctioned by the Tribunal with specific qualifications and conditions. The Tribunal underscored the necessity of detailed scrutiny and recording of satisfaction by the Adjudicating Authority. The Resolution Plan is binding on the Corporate Debtor and other stakeholders, and the "Moratorium" under Section 14 ceases to have any effect. The Resolution Professional is directed to hand over all relevant records to the Resolution Applicant.
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