2020 (7) TMI 203 - Tri - Insolvency and Bankruptcy

Approval of Resolution Plan - CIRP process - withdrawal of EOI after the issue of provisional list - HELD THAT - As approved by a 100% vote by' the COC, this Adjudicating Authority holds that the Resolution Plan of M/s Sabrang Steel Pvt. Ltd, as submitted by the RP is in conformity with the purposes and objects of the IBC, and all Rules and Regulations and the same meets the requirements of provisions of Section 30 of the Code of 2016 and Regulation 37 and 38 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The Plan not only appears to be viable but also takes care of all the stakeholders, notably the financial creditors, Operational creditors, Workmen and employees, Other Current Liabilities and Contingent Liabilities. It appears from clause 11.3 Of the Resolution Plan that a Monitoring Committee shall be formed comprising of the Resolution Professional, Members Of Financial Creditors/ Banks and representatives of the successful Resolution Applicant to monitor the progress and implementation of the plan at regular intervals, till the creditors are paid their dues as envisaged under the Resolution Plan. Cost or expenses of the monitoring committee including fees of Resolution Professional post approval of Resolution Plan by the NCLT shall be borne by the successful Resolution Applicant with a capping of ₹ 2 lakh only - the Adjudicating Authority records its satisfaction for granting approval to the final Resolution Plan. It also believes that it would be in the best interest of the FCS, its employees, OC, and all stake holders to accept the final Resolution Plan. Resolution Plan is approved - Approved Final Resolution Plan shall come into force with immediate effect - moratorium Order passed under Section 14 shall cease to have effect.

Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) read with Section 31 of the Insolvency and Bankruptcy Code, 2016 (IBC).
2. Exclusion of certain days from the Corporate Insolvency Resolution Process (CIRP) period.
3. Evaluation and extension of the Expression of Interest (EOI) submission deadlines.
4. Feasibility and viability of the Resolution Plan.
5. Compliance with Section 29A of IBC.
6. Monitoring and implementation of the Resolution Plan.
7. Dispensation, concession, and waivers sought in the Resolution Plan.
8. Binding effect of the approved Resolution Plan.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan:
The application IA No. 03 of 2020 was filed by the Resolution Professional (RP) of M/S Langlai Tea and Industries Ltd. seeking approval of the Resolution Plan submitted by M/S Sabrang Steel Private Ltd. The Tribunal considered the details of the resolution process, including the submission and approval of the plan by the Committee of Creditors (COC) with 100% voting in favor.

2. Exclusion of Certain Days from CIRP Period:
The RP filed an application for the exclusion of 34 days from the CIRP period due to the change in the Resolution Professional. This exclusion was granted by the Tribunal, thereby extending the CIRP period accordingly.

3. Evaluation and Extension of EOI Submission Deadlines:
The RP published a public announcement inviting EOIs, and the deadlines were extended multiple times due to the lack of initial responses. Eventually, EOIs were received from three prospective applicants, and the final list of eligible applicants was issued. The last date for submission of the Resolution Plan was also extended, leading to the submission of a plan by M/S Sabrang Steel Pvt. Ltd.

4. Feasibility and Viability of the Resolution Plan:
The COC discussed the Resolution Plan in detail, noting that the payment to financial creditors was below the average liquidation value. However, they concluded that the proposed payment was higher than what would be realized in liquidation. The plan was deemed feasible and viable, safeguarding the interests of all stakeholders, including financial creditors, operational creditors, workmen, and employees.

5. Compliance with Section 29A of IBC:
The COC confirmed that the Resolution Applicant was not ineligible under Section 29A of the IBC. The plan identified specific sources of funds for CIRP costs, liquidation value due to operational creditors, and other stakeholders' interests.

6. Monitoring and Implementation of the Resolution Plan:
The Resolution Plan included terms for its implementation within 60 days of NCLT approval. A Monitoring Committee comprising the RP, financial creditors, and representatives of the successful Resolution Applicant was proposed to oversee the implementation. The costs of the Monitoring Committee were capped at ?2 lakh.

7. Dispensation, Concession, and Waivers Sought:
The Resolution Plan sought several dispensations, concessions, and waivers. The Tribunal clarified that approval of the plan does not mean automatic waiver of legal proceedings, and the Resolution Applicants may approach competent authorities for appropriate reliefs.

8. Binding Effect of the Approved Resolution Plan:
The Tribunal ordered that the approved Resolution Plan would come into force immediately, and all relevant parties are bound by its terms. The moratorium order under Section 14 ceased to have effect. Parties were directed to extend full cooperation to M/S Sabrang Steel Pvt. Ltd., and any deviation in implementing the plan would result in penalties under Chapter 7 of the IBC.

Conclusion:
The Tribunal approved the Resolution Plan submitted by M/S Sabrang Steel Pvt. Ltd., noting its compliance with the IBC and its feasibility. The plan addressed the interests of all stakeholders and included provisions for effective implementation and monitoring. The proceedings in C.P (IB)/10/GB/2019 were disposed of in terms of the approval, with directions for strict compliance and cooperation from all concerned parties.

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