2019 (12) TMI 514 - Tri - Insolvency and Bankruptcy

Approval of Resolution plan - Section 30 (6) of Insolvency Bankruptcy Code, 2016 - qualification of Resolution Professional - HELD THAT - Resolution Plan submitted by Resolution Applicant Consortium of Sri City Private Limited and KCR Enterprise LLP ( Resolution Applicant ) along with the addendum which is approved by members of CoC having 75.91% voting share stands approved as per Section 31(l) of the Code. In other words we are satisfied with the Resolution Plan as approved by Committee of Creditors under Section 30(4) of the Code and it meets the requirement as referred to in Section 30(2) of IBC, 2016. Accordingly, the Resolution Plan stands approved and the same is binding on Corporate Debtor, its employees, Members, Creditors including the Central Government, any State Government or any Local Authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, Guarantors and Stakeholders involved in the Resolution Plan in terms of Section 31(l) of the Code. The moratorium order passed under Section 14 shall cease to have effect from today.

Issues Involved:
1. Approval of the Resolution Plan under Sections 30(6) and 31 of the Insolvency and Bankruptcy Code, 2016.
2. Compliance with the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
3. Voting and approval by the Committee of Creditors (CoC).
4. Distribution of claims and payments to creditors.
5. Reliefs and concessions sought by the Resolution Applicant.
6. Implementation and effect of the Resolution Plan.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan:
The application was filed under Sections 30(6) and 31 of the Insolvency and Bankruptcy Code, 2016, seeking approval of the resolution plan submitted by the Resolution Professional. The Tribunal admitted the petition and initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, appointing an Interim Resolution Professional (IRP).

2. Compliance with Regulations:
The IRP issued a public announcement inviting claims from stakeholders, constituted the Committee of Creditors (CoC), and appointed valuers to determine the fair and liquidation value of the Corporate Debtor. The Information Memorandum (IM) was prepared and shared with the CoC. The Transaction Reviewer was appointed to conduct a transaction review, and Expression of Interest (EOI) was sought from prospective resolution applicants.

3. Voting and Approval by CoC:
The resolution plan submitted by the Consortium of Sri City Private Limited and KCR Enterprise LLP was approved by the CoC with a voting majority of 75.91%. The CoC meetings involved discussions on the resolution plan, extensions for submission of EOIs, and evaluation of eligibility criteria under Section 29A of the Code. The final resolution plan was approved after revisions and addendums were submitted.

4. Distribution of Claims and Payments to Creditors:
The resolution plan addressed claims from financial creditors, operational creditors, and employees. The total outstanding financial debt admitted was INR 5002.48 crores, and the operational debt was INR 325.66 crores. The plan proposed an upfront payment of INR 10 crores to financial creditors and a residual debt of INR 625 crores to be serviced over eight years. A Non-Financial Creditor Allocated Amount of INR 25 crores was earmarked for CIRP costs, dues to workmen and employees, statutory liabilities, and operational creditors.

5. Reliefs and Concessions Sought:
The Resolution Applicant sought various reliefs and concessions, including exemptions from taxes, renewal of licenses, waiver of past non-compliances, and approval of the plan by governmental authorities. These reliefs were deemed necessary for the effective implementation of the resolution plan.

6. Implementation and Effect of the Resolution Plan:
The plan included key steps such as the appointment of a Steering Committee, implementation agency, amendment of constitutional documents, and restructuring of debt. The plan also proposed the infusion of INR 495 crores into the Corporate Debtor, cancellation of dues to related parties, and retention of employees. The Tribunal approved the resolution plan, binding on all stakeholders, and directed the Resolution Professional to forward records to the Board.

Order:
The Tribunal approved the resolution plan submitted by the Resolution Applicant, binding on the Corporate Debtor and all stakeholders. The moratorium order ceased, and the Resolution Professional was directed to forward records to the Board. The Resolution Applicant was required to obtain necessary approvals within one year.

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