2019 (7) TMI 1129 - Tri - Insolvency and Bankruptcy

Admissibility of petition - approval of resolution plan - Initiation of Corporate Insolvency Resolution Process - corporate debtor - default in paying the financial debt - section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The resolution plan of Sunil Ispat and Power Ltd. as approved by the CoC under sub-section (4) of section 30 of the I and B Code meets all requirements as stated under sub-section (2) of section 30 of the I and B Code, hence the same is approved.

Issues:
- Approval of resolution plan under section 31(1) of the Insolvency and Bankruptcy Code, 2016
- Compliance with requirements of section 30(2) of the Insolvency and Bankruptcy Code, 2016
- Affidavit submissions under section 29A of the Insolvency and Bankruptcy Code, 2016
- Management of affairs of the corporate debtor and supervision of the resolution plan
- Treatment of operational creditor claims and government dues/taxes in the resolution plan

Approval of Resolution Plan under Section 31(1) of the Insolvency and Bankruptcy Code, 2016:
The National Company Law Tribunal - Kolkata Bench considered an application filed by a financial creditor to initiate the corporate insolvency resolution process against a corporate debtor due to default in payment of a substantial financial debt. The Tribunal reviewed the resolution plan submitted by the successful resolution applicant, M/s. Maruti Ferrous P. Ltd. After detailed examination, the Tribunal found the plan compliant with the requirements of the law and approved it under section 31(1) of the Insolvency and Bankruptcy Code, 2016. The approval rendered the resolution plan binding on the corporate debtor, its employees, members, creditors, and other stakeholders involved in the process.

Compliance with Requirements of Section 30(2) of the Insolvency and Bankruptcy Code, 2016:
The Tribunal emphasized the necessity for the resolution plan to meet the stipulated conditions outlined in section 30(2) of the Insolvency and Bankruptcy Code, 2016. These conditions included provisions for insolvency resolution costs, payment of operational creditors' debts, post-approval management of the corporate debtor, supervision mechanism for plan implementation, adherence to legal provisions, and compliance with requirements specified by the board. The Tribunal meticulously reviewed the resolution plan to ensure its alignment with these statutory requirements.

Affidavit Submissions under Section 29A of the Insolvency and Bankruptcy Code, 2016:
The law mandated that the successful resolution applicant and the resolution professional submit affidavits confirming their eligibility and compliance with section 29A of the Insolvency and Bankruptcy Code, 2016, which pertains to disqualification criteria related to the corporate debtor. The Tribunal verified the submission of these affidavits in the case and considered them as part of the approval process for the resolution plan.

Management of Affairs of the Corporate Debtor and Supervision of the Resolution Plan:
The resolution plan presented a mechanism for the management of the corporate debtor's affairs post-approval, including the formation of a monitoring committee tasked with overseeing the plan's implementation. The Tribunal acknowledged these provisions in the plan as essential for ensuring effective management and supervision of the corporate debtor's operations following the resolution process.

Treatment of Operational Creditor Claims and Government Dues/Taxes in the Resolution Plan:
During the assessment of the resolution plan, the Tribunal noted the operational creditor claims verified by the resolution professional and highlighted the importance of addressing government dues and taxes in the plan. While the plan suggested the waiver or write-off of certain claims, the Tribunal clarified that it lacked the jurisdiction to eliminate government dues and taxes, emphasizing that such charges must remain intact. The approval of the resolution plan was subject to these observations to ensure the proper treatment of operational creditor claims and government obligations.

In an amended order, the Tribunal corrected a clerical error regarding the naming of the corporate debtor in the judgment. The revised order maintained the approval of the resolution plan and directed the registry to communicate the decision to relevant parties. The resolution plan's implementation, effective immediately upon compliance with government dues and taxes, marked the conclusion of the case, with appreciation extended to the resolution professional for facilitating the revival of the distressed company.

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