2021 (4) TMI 772 - Tri - Insolvency and Bankruptcy

Approval of Resolution Plan - Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The Resolution Plan as approved by the CoC under Section 30(4) of the Code meets the requirements of Section 30(2) of the Code and Regulations 37 38 of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law. The same needs to be approved as provided under Section 31 of the Code. Application allowed.

Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016.
2. Compliance with the provisions of the Insolvency and Bankruptcy Code and related regulations.
3. Payment and priority of creditors under the Resolution Plan.
4. Financial status and capability of the Resolution Applicant.
5. Implementation and supervision of the Resolution Plan.
6. Impact of stay orders from the High Court of Delhi on the implementation of the Resolution Plan.
7. Compliance with mandatory contents of the Resolution Plan under the Code and CIRP Regulations.
8. Binding nature and effect of the approved Resolution Plan.

Detailed Analysis:

1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016:
The Resolution Professional sought approval for the Resolution Plan submitted by Majestic Auto Limited. The Corporate Insolvency Resolution Process (CIRP) for the Corporate Debtor was initiated on 08/05/2019. The Committee of Creditors (CoC), consisting of Axis Bank Limited, approved the Resolution Plan with 100% voting after due verification of eligibility under Section 29A of the Code.

2. Compliance with the provisions of the Insolvency and Bankruptcy Code and related regulations:
The Applicant confirmed that the CIRP was conducted in compliance with the Code and related rules. The Resolution Plan was evaluated and approved by the CoC, meeting the requirements of Section 30(2) of the Code. The Plan included provisions for priority payment of CIRP costs, payment to operational creditors, management of the Corporate Debtor post-approval, and implementation and supervision of the plan.

3. Payment and priority of creditors under the Resolution Plan:
The Resolution Plan proposed an infusion of ?81.84 Crores within 30 days of approval. The CIRP costs would be met from the internal generation of the Corporate Debtor. Payments to creditors were outlined, with operational creditors being paid in priority over financial creditors. The Plan also addressed the liability of security deposits payable to tenants, amounting to ?6,03,76,146.

4. Financial status and capability of the Resolution Applicant:
The Resolution Applicant, a Public Limited Company, demonstrated its financial capability to manage the Corporate Debtor. It had total assets of over ?362.98 Crores, including significant investments and current assets. The Applicant provided audited financial statements, a banker's solvency letter, and a Chartered Accountant's certificate to substantiate its financial strength.

5. Implementation and supervision of the Resolution Plan:
The Plan provided for the appointment of a new Board of Directors and the Resolution Professional as a monitoring agent. The implementation was contingent on the vacation or modification of stay orders from the High Court of Delhi. If implementation did not commence within 18 months, further action would be discussed with the Applicant and CoC.

6. Impact of stay orders from the High Court of Delhi on the implementation of the Resolution Plan:
The implementation of the Resolution Plan depended on the vacation or modification of stay orders passed by the High Court of Delhi in the Daiichi proceedings. The Corporate Debtor was made a garnishee, and interim injunctions were passed against its assets. The Applicant had filed an application for vacation/modification of these orders, but the High Court did not pass any orders due to the ongoing CIRP.

7. Compliance with mandatory contents of the Resolution Plan under the Code and CIRP Regulations:
The Resolution Plan complied with Regulations 38 and 39 of the Insolvency and Bankruptcy Board of India (Corporate Insolvency Resolution Process) Regulations, 2016. It included provisions for payment to operational creditors in priority, management and control of the Corporate Debtor, and adequate means for supervising implementation. The Plan also addressed the cause of default, feasibility, and viability.

8. Binding nature and effect of the approved Resolution Plan:
The Tribunal approved the Resolution Plan, making it binding on the Corporate Debtor, its employees, members, creditors, and other stakeholders. The moratorium under Section 14 of the Code ceased to have effect from the date of approval. The Applicant and the Monitoring Committee were tasked with supervising the implementation, and the Applicant was required to file status reports with the Authority.

Order:
The Application was allowed, and the Resolution Plan submitted by Majestic Auto Limited was approved and became effective from the date of the order. The Plan was binding on all relevant parties, and the moratorium ceased. The Applicant was instructed to forward records to the IBBI and send a certified copy of the order to the CoC and the Resolution Applicant.

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