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2019 (6) TMI 1152 - Tri - Insolvency and BankruptcyApproval of Resolution Plan - HELD THAT - Requirements under Section 31(1) of the Code are satisfied in the present case. In para No.3 of Form H (supra) the resolution plan has certified that the resolution plan complies with all the provisions of the Code and Regulations and does not contravene any of the provisions of the law for the time being in force except to the extent already discussed above. Resolution Professional has also certified that the resolution applicant Kundan Care Products Ltd. has submitted affidavit dated 29.06.2018 pursuant to Section 30(1) of the Code confirming its eligibility under Section 29A of the Code to submit the resolution plan and the contents of the said affidavit are in order. The resolution professional has submitted that the resolution plan has been approved by the CoC with 100% voting share in accordance with the provisions of the Code and CIRP Regulations made thereunder and after considering the feasibility and viability and other requirements specified by the CIRP Regulations. The final consideration payable by the resolution applicant M/s. Kundan Care Products Ltd. is up front payment of ₹ 45.12 crores towards insolvency resolution process costs and secured financial creditors and ₹ 50,00,000/- for the operational creditors within a period and for the purpose discussed above. The members of the CoC were given an opportunity of being heard and have stated that all the three financial creditors have approved the plan and no objections are to be filed. We have already pointed out above that the consideration of ₹ 45.12 crores plus ₹ 50,00,000/- is more than that of the fair value of ₹ 25.90 crores and liquidation value of ₹ 15.38 crores (para 2 of Form H) . Above that CA was filed by the ex-Director of the suspended Board of Directors Shri Rajit Mehra and his plea for impleadment was not accepted but in the interest of justice, the objections raised by the learned counsel have been considered above. We may add here that an application (CA No.442/2018) under Sections 43, 44, 66 and 67 read with Section 69 of the Code has been filed by the resolution professional in respect of preferential transactions and fraudulent trading and those matters are still pending. The resolution plan submitted by M/s. Kundan Care Products Ltd. as approved by the CoC under Section 30 (4) of the Code is approved and the same shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan, with the following further directions to the Resolution Applicant - (i) that the Resolution Applicant shall be bound by the directions, judgements, orders, interim orders or otherwise, subject to the right to challenge these orders in respect of the assets/properties of the corporate debtor. (ii) that the Resolution Applicant shall deposit an additional amount of ₹ 50,00,000 (Rupees fifty lacs only) over and above the bid amount of ₹ 45.12 crores within seven days of the receipt of copy of this order in a separate account in consultation with the monitoring agency for payment to operational creditors as explained at page 9 of the resolution plan and in case the amount is still unutilized, the same would be disbursed to operational creditors on pro rata basis. Under the provisions of Section 31 (3) of the Code, we also direct as under - (a) The moratorium order passed by the Adjudicating Authority under Section 14 of the Code on 25.01.2018 shall cease to have effect; and (b) The resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database.
Issues Involved:
1. Impleadment of Ex-Director as Respondent/Objector. 2. Approval of the Resolution Plan. Issue-wise Detailed Analysis: 1. Impleadment of Ex-Director as Respondent/Objector: The ex-Director filed CA No.477/2018 under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (the Code) for impleadment as respondent/objector in CA No.339/2018. The ex-Director claimed entitlement to attend the Committee of Creditors (CoC) meetings as a shareholder of the corporate debtor. The Tribunal noted that under Section 24 of the Code, the ex-Director is entitled to attend but not vote in CoC meetings. The ex-Director attended only the second CoC meeting, and no objections were raised by rival resolution applicants. The Tribunal found no merit in the plea for impleadment but allowed the ex-Director's counsel to be heard regarding objections to the resolution plan. Consequently, CA No.477/2018 was disposed of without accepting the impleadment plea. 2. Approval of the Resolution Plan: CA No.339/2018 was filed by the Resolution Professional (RP) seeking sanction of the resolution plan under Sections 30(6) and 31 of the Code. The insolvency petition initiated by Punjab National Bank was admitted on 25.01.2018, and the Interim Resolution Professional (IRP) was appointed on 30.01.2018. The IRP issued a public announcement inviting claims, constituted the CoC, and appointed two valuers to determine the liquidation value, which was assessed at ?15.39 crores. The CoC resolved to continue the IRP as the RP and approved the evaluation matrix for resolution plans. The RP received three resolution plans from M/s. Kundan Care Products Ltd., M/s. Ajanta Energy Pvt. Ltd., and M/s. Agam Pulp and Papers Pvt. Ltd. The CoC adopted the Swiss Challenge Method, leading to the final bid of ?45.12 crores by M/s. Kundan Care Products Ltd., which was adjudged the successful resolution applicant. The CoC approved the resolution plan by 100% voting share. The ex-Director raised objections, including allegations of haste and malafide intentions, inadequate publicity, and undervaluation of assets. The Tribunal found these objections unsubstantiated and noted that the resolution plan complied with Section 30(2) of the Code, providing for insolvency resolution process costs, repayment of operational creditors, management and implementation of the resolution plan, and adherence to legal provisions. The Tribunal examined the compliance of the resolution plan with the Code and Regulations, including the feasibility and viability of the plan, and found it satisfactory. The RP certified that the resolution plan met all requirements, and the CoC approved it after considering its feasibility and viability. The Tribunal approved the resolution plan submitted by M/s. Kundan Care Products Ltd., binding on all stakeholders, with directions for the resolution applicant to deposit an additional ?50,00,000 for operational creditors and abide by any directions or orders regarding the corporate debtor's assets. The moratorium order ceased to have effect, and the RP was directed to forward all records to the Board. Conclusion: The Tribunal disposed of CA No.477/2018 without accepting the plea for impleadment but heard the ex-Director's objections. The Tribunal approved the resolution plan in CA No.339/2018, binding on all stakeholders, with specific directions for the resolution applicant and cessation of the moratorium order.
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