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2019 (10) TMI 544 - Tri - Insolvency and BankruptcyApproval of Resolution plan - liquidation of Corporate debtor - fresh infusion of funds - Section 30(6) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT - This Adjudicating Authority is of the view that the contentions raised by MCGM cannot be accepted due to the conflicting and contradictory stands taken by it in the course of hearings. Further, the contention of MCGM relating to expiry of the period of 270 days is untenable and unacceptable for the reason that the Application by the Resolution Professional for the approval of the Resolution Plan has been made well before the expiry of the period of CIRP and the same is in accordance with the provisions of the Code. Therefore, the objections raised by the MCGM are hereby rejected. Further, though the Application for approval of the Resolution Plan was filed on 07.09.2018, but, due to multiple Interlocutory Applications being filed by one party or the other, and matter being contested before Hon'ble NCLAT and Hon'ble Supreme Court, the final hearing on IA 408 of 2018 could not be taken-up and concluded by this Adjudicating Authority. The Resolution Applicant to the satisfaction of this Adjudicating Authority regarding sources of funds for the implementation of the Resolution Plan, has stated that they have been adequately tied-up. In this regard, the Resolution Applicant has filed a copy of the Letter of Comfort issued by Yes Bank and copy of Addendum Facility Letter issued by Yes Bank. The Resolution Applicant has also submitted a Financial Guarantee issued by First Energy Bank BSC, Bahrain which has been accepted by the CoC. However, it is noticed by this Adjudicating Authority that the said bank guarantee is valid only upto 30th June, 2019. It is directed that the validity period of the bank guarantee be extended till the complete implementation of the Resolution Plan. The 'Resolution Plan' 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 - Moratorium declared.
Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016. 2. Objections raised by the Municipal Corporation of Greater Mumbai (MCGM) regarding the Resolution Plan. 3. Compliance of the Resolution Plan with the provisions of the Insolvency and Bankruptcy Code, 2016 and related regulations. 4. Role and participation of MCGM in the Committee of Creditors (CoC) and their claims. 5. Implementation and monitoring of the Resolution Plan. Issue-wise Analysis: 1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016: The application IA No. 408/2019 was filed by the Resolution Professional seeking approval of the Resolution Plan. The Corporate Insolvency Resolution Process (CIRP) commenced on 13.03.2018, and the Resolution Professional (RP) was confirmed at the first CoC meeting on 12.04.2018. The CoC unanimously approved the Resolution Plan with 100% votes on 05.09.2018. The Resolution Plan includes writing off the issued and paid-up share capital, infusion of ?1002.54 Crores, and priority payment of CIRP costs, liquidation value to Operational Creditors, and dissenting Financial Creditors. 2. Objections raised by the Municipal Corporation of Greater Mumbai (MCGM) regarding the Resolution Plan: MCGM filed IA No. 207/2018 seeking to be declared as a Financial Creditor and Operational Creditor. They contended that the lease of land to the Corporate Debtor should be classified as a financial lease and that their claims for municipal taxes should be considered operational debt. MCGM also raised objections to the Resolution Plan, citing non-compliance with the Contract Agreement, failure to provide 20% of hospital beds, and non-payment of dues. MCGM argued that the lease agreement was not executed due to the Corporate Debtor's defaults, and thus, no leasehold rights existed. They sought the rejection of the Resolution Plan and liquidation of the Corporate Debtor. 3. Compliance of the Resolution Plan with the provisions of the Insolvency and Bankruptcy Code, 2016 and related regulations: The Resolution Plan was found to meet the requirements of Section 30(2) of the I&B Code, 2016, and Regulations 37, 38, 38(1A), and 39(4) of the IBBI (CIRP) Regulations, 2016. The Resolution Plan provided for 78.07% payment to Financial Creditors and 75% payment to Operational Creditors, including doctors. The Resolution Applicant agreed to abide by the conditions stipulated by MCGM, and the plan's amount exceeded the liquidation value of the Corporate Debtor. 4. Role and participation of MCGM in the Committee of Creditors (CoC) and their claims: MCGM participated in CoC meetings as a special invitee and had access to all information shared with CoC members. Despite their objections, MCGM had previously accepted the terms of the Resolution Plan subject to certain conditions. The RP argued that MCGM's claims and objections were inconsistent and contradictory. The Adjudicating Authority rejected MCGM's objections, stating that they were raised at a belated stage and were not tenable. 5. Implementation and monitoring of the Resolution Plan: The Resolution Plan included provisions for the management and control of the Corporate Debtor, with a monitoring agency overseeing the implementation. The Resolution Applicant provided a financial guarantee and received a sanction letter from Yes Bank for the proposed loan. The Adjudicating Authority directed the Resolution Professional to be a member of the monitoring agency and file status reports. The plan was approved, binding on all stakeholders, and the moratorium ceased from the date of the order. Conclusion: The Adjudicating Authority approved the Resolution Plan, rejecting MCGM's objections and directing the implementation of the plan as per the provisions of the Insolvency and Bankruptcy Code, 2016. The Resolution Professional was tasked with ensuring compliance and reporting on the progress of the plan's implementation.
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