2021 (1) TMI 976 - Tri - Insolvency and Bankruptcy

Approval of Resolution Plan - sections 30(6) and 31 of the I B Code, 2016 r/w Regulation 39(4) of CIRP Regulations, 2016 - HELD THAT - It appears that the Resolution Plan dated 26th February, 2020 as duly approved by the Committee of Creditors on 28th February, 2020 for Badami Sugars Limited, submitted by M/s. Sri Sai Priya Sugars Limited, satisfies all the requisite conditions for its approval under section 31(1) of the Code. Details of the fund infusion, and the sources from which the Resolution Applicant shall arrange the same have been provided in the Resolution Plan. The same provides for the creditors in the distribution table filed with the Plan, and provides adequate details of the infusion of funds required as working capital as well as for payment of the debts. Details of projected profits and cash flows have also been provided. Considering also the past experience in similar business and credentials of the Directors and Promoters of the Resolution Applicant, as mentioned in the Resolution Plan, we are satisfied about the viability of the same. The Resolution Plan also provides for the appointment of a Monitoring Professional, to oversee the implementation of the Resolution Plan. The Resolution Plan is approved by the CoC with 100% in accordance with law. No prejudice would be caused to any party, if the same is approved. The said Resolution Plan is fit to be approved under section 31 (1) of the Code. The Resolution Plan dated 26th February, 2020 submitted by M/s. Shri Sai Priya Sugars Limited as approved by the Committee of Creditors at their 5th meeting held on 28th February, 2020 with 100% voting is hereby approved by declaring that the Resolution Plan will be binding on the Corporate Debtor (Applicant) and its employees, members, creditors including the Central Government, any State Government or any local authority to whom a debt in respect of payment of dues arising under any law for the time being in force, as authorities to whom statutory dues are owed, guarantors, and other stakeholders involved in the Resolution Plan - Moratorium shall cease to have effect.

Summary

Issues Involved:
1. Approval of the Resolution Plan submitted by Shri Sai Priya Sugars Limited.
2. Compliance with the provisions of the Insolvency and Bankruptcy Code (I&B Code), 2016.
3. Distribution of funds to various creditors as per the Resolution Plan.
4. Evaluation of the Resolution Plan by the Committee of Creditors (CoC).
5. Rejection of the belated Expression of Interest (EOI) by Bilagi Sugar Mills Limited.
6. Implementation and supervision of the Resolution Plan.
7. Termination of the moratorium and handover of management control.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan:
The application for the approval of the Resolution Plan was filed under sections 30(6) and 31 of the I&B Code, 2016 r/w Regulation 39(4) of CIRP Regulations, 2016. The Resolution Plan submitted by Shri Sai Priya Sugars Limited was approved by the CoC with 100% voting. The Tribunal, after considering all facts and circumstances, approved the Resolution Plan, declaring it binding on all stakeholders involved.

2. Compliance with the Provisions of the I&B Code:
The Resolution Professional (RP) ensured compliance with sections 13 and 15 of the I&B Code and Regulation 6 of the CIRP Regulations, 2016. The RP made a public announcement, constituted the CoC, and appointed registered valuers. The RP shared the Information Memorandum with CoC members and published Form-G for inviting EOIs. The Resolution Plan was evaluated based on the Evaluation Matrix approved by the CoC.

3. Distribution of Funds to Various Creditors:
The Resolution Plan provided for the distribution of funds as follows:
- CIRP Cost: ?0.50 Crores.
- Secured Financial Creditors: ?16.50 Crores.
- Unsecured Financial Creditors: NIL.
- Operational Creditors: NIL.
- Statutory Dues: NIL.
The distribution was based on the admitted claims and the priority order laid down in section 53 of the I&B Code.

4. Evaluation of the Resolution Plan by the CoC:
The CoC evaluated the Resolution Plan based on the Evaluation Matrix, which included parameters such as upfront cash recovery, NPV of residual loan, equity contribution, reasonableness of assumptions, track record, turnaround expertise, and financial strength. Shri Sai Priya Sugars Limited scored higher than the competing bidder, T. Rajkumar, and was approved by the CoC.

5. Rejection of the Belated EOI by Bilagi Sugar Mills Limited:
Bilagi Sugar Mills Limited submitted an EOI after the deadline, which was rejected by the RP. The CoC decided not to consider the belated EOI and proceeded with the available bids. The Tribunal dismissed the application filed by Bilagi Sugar Mills Limited seeking consideration of their EOI.

6. Implementation and Supervision of the Resolution Plan:
The Resolution Plan provided for the appointment of a Monitoring Professional to oversee its implementation. The RP was directed to hand over management control to the Resolution Applicant. The Resolution Plan included a detailed implementation schedule, sources of funding, and projected financial statements for the next five years.

7. Termination of the Moratorium and Handover of Management Control:
The moratorium imposed by the Tribunal ceased to have effect from the date of the order. The RP was directed to hand over all assets and documents to the Resolution Applicant immediately. The RP was also instructed to forward all records relating to the CIRP to the Insolvency and Bankruptcy Board of India (IBBI).

Conclusion:
The Tribunal approved the Resolution Plan submitted by Shri Sai Priya Sugars Limited, finding it compliant with the I&B Code and beneficial for all stakeholders. The RP was directed to facilitate the handover of management control, and the moratorium was lifted. The Resolution Applicant was given a period of one year to obtain necessary approvals required under any law for the implementation of the Resolution Plan.