2020 (12) TMI 410 - Tri - Insolvency and Bankruptcy

Approval of the Resolution Plan - section 30(6) of the Insolvency and Bankruptcy Code 2016 - HELD THAT - On perusal of the Resolution Plan we find that the resolution plan has necessary provisions for its effective implementation. The CoC has approved this Resolution Plan with requisite vote of more than 66% as required under the law in favor of the Resolution Plan - We are satisfied that the Resolution Plan fulfils the mandatory requirements of Section 30 of the I B Code and Regulation 38 39 of IBBI (CIRP) Regulations 2016. In view of the provisions of Section 30(4) of the Code we approve the resolution plan submitted for International Book House Private Limited as approved by the CoC. The resolution plan so approved shall be binding on the corporate debtor and 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 other stakeholders involved in the resolution plan. Approval of revised Resolution Plan - HELD THAT - Hon ble Supreme Court in Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta Ors. 2019 (11) TMI 731 - SUPREME COURT to buttress her point that the applicant cannot challenge the approved resolution plan despite the fact that the applicant itself has voted in favor of the Resolution Plan albeit not voted in approving the distribution pattern. The Applicant in this application is an unsecured financial creditor of the Corporate Debtor who has to share the sum of 5 lakhs with all other unsecured financial creditors thereby getting a share of only 1.44% of the admitted claim amount of all unsecured creditors as per the resolution plan approved by the CoC. In the resolution plan all the unsecured creditors are given the same treatment. The secured financial creditors and unsecured financial creditors may not be treated alike. In our view there is no discriminatory treatment among the unsecured creditors. The Respondent No. 1 and 2 be ordered and directed to provide to the Applicant sharing percentage of its admitted claim at par with the admitted claim of other similar Financial Creditors without any discrimination - The Respondent Nos. 1 2 be ordered and directed to submit revised Resolution Plan taking into consideration the interest of all stakeholders and provide for distribution of the amount of Resolution Plan without any discrimination or preference and thereby equate it with other similarly situated Financial Creditors.

Summary

Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016.
2. Allegation of discriminatory distribution among similarly situated secured financial creditors.
3. Treatment of unsecured financial creditors in the distribution of the Resolution Plan amount.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016:
The application MA 3114/2019 was filed seeking approval of the Resolution Plan submitted by Nitrex Chemicals India Limited for International Book House Private Limited. The Tribunal noted that the Committee of Creditors (CoC) had approved the Resolution Plan with a 96.91% vote share. The Resolution Plan included a detailed distribution pattern and proposed various payments to different classes of creditors, including secured financial creditors, unsecured financial creditors, employees, and operational creditors. The CoC also approved the distribution pattern with a 66.98% vote share. The Tribunal found that the Resolution Plan complied with all mandatory requirements under Section 30 of the Insolvency and Bankruptcy Code and relevant regulations. Therefore, the Tribunal approved the Resolution Plan under Section 31(1) of the Code, making it binding on all stakeholders involved.

2. Allegation of discriminatory distribution among similarly situated secured financial creditors:
IndusInd Bank Limited (IBL) filed MA 3197/2019 alleging discrimination in the distribution of the Resolution Plan amount. IBL contended that it was allotted a meager sum compared to Religare Finvest Limited (R3), despite both being secured financial creditors. The Tribunal noted that the CoC, in its commercial wisdom, decided the distribution pattern based on the value of the security held by each creditor. Religare's security was an immovable asset with a higher liquidation value, whereas IBL's security was against current assets with a lower liquidation value. The Tribunal referred to the Supreme Court judgment in the Essar Steel case, emphasizing that the CoC's commercial wisdom prevails in such matters. The Tribunal found no fault in the CoC's decision and dismissed the application, stating that the distribution pattern was within the legal framework and not discriminatory.

3. Treatment of unsecured financial creditors in the distribution of the Resolution Plan amount:
MA 3236/2019 was filed by an unsecured financial creditor seeking equal treatment with other financial creditors. The applicant argued that the distribution pattern was discriminatory. The Tribunal observed that all unsecured financial creditors were given the same treatment in the Resolution Plan, sharing a sum of ?5 lakhs. The Tribunal reiterated that secured and unsecured financial creditors could not be treated alike and found no discriminatory treatment among the unsecured creditors. The Tribunal dismissed the application, stating that the treatment of unsecured creditors was within the legal parameters and consistent with judicial pronouncements.

Conclusion:
The Tribunal approved the Resolution Plan submitted by Nitrex Chemicals India Limited, finding it compliant with the Insolvency and Bankruptcy Code and relevant regulations. The allegations of discriminatory distribution among secured financial creditors were dismissed, with the Tribunal upholding the CoC's commercial wisdom. The treatment of unsecured financial creditors was also found to be non-discriminatory and within legal bounds.