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2022 (3) TMI 628 - Tri - Insolvency and BankruptcyApproval of Resolution plan - HELD THAT - The approval of the resolution plan has been sought under Section 31 of the Code. The conditions provided under Section 31(1) are that the resolution plan is approved by Committee of Creditors under Section 34 of the Code and that the resolution plan so approved meets the requirement of Section 30(2) and that the Resolution plan has provisions for its effective implementation - resolution plan was approved by 91.06% majority of the CoC and therefore, the conditions of Section 30 (4) are satisfied. The resolution plan requires that the Resolution applicant would provide payment of CIRP cost in full and actual basis. The RA shall pay an amount of ₹ 1 crore which shall be utilized for making payment of CIRP cost, if the amount is less than the balance amount payable to CIRP cost shall be paid out of the first tranche of INR 48.14 crores to be paid by the Resolution Applicant to the Financial Creditor. The liquidation value is approximately ₹ 71.28 crores however the resolution plan provides for payment of 227 crores. Out of the resolution amount, an amount of ₹ 225.14 crores is proposed to be paid upfront to the financial creditor. On the closing date the RA shall pay INR 48.14 crores to the financial creditor. The RA shall pay INR 50 Crore on 60th day from the closing date and pay 50 Crores to Financial Creditor on 90th Day, ₹ 27 Crores to the Financial Creditor 120th days from the closing date. The performance Bank guarantee submitted by the RA shall be appropriated towards this tranche of 27 Crores. Section 30(2)(c) (d) the resolution plan provides that upon approval, the RA will constitute an Interim Monitoring Agency, which shall comprise of four members out of which two members shall be appointed of RA and two members shall be appointed by the CoC - Section 30(2) (e), the RP has certified that the Resolution Plan complied with the provision of the Code and regulation and does not contravene any provision of law from the time being in force. In COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS 2019 (11) TMI 731 - SUPREME COURT the Hon ble Apex Court clearly laid down that the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved. The Resolution plan is accordingly approved - any relief sought in the Resolution Plan, where any contract, agreement understanding, Proceeding, action, notice etc. not specifically identified, or is for a future contingency, is, at this point of time, rejected - Resolution Plan as approved is binding on the Corporate Debtor and other stakeholders involved so that the revival of the Corporate Debtor can come into force with immediate effect - Moratorium imposed under section 14 shall cease to have effect from the date of this order. Application allowed.
Issues Involved:
1. Filing of application for liquidation of the Corporate Debtor. 2. Approval of the revised resolution plan. 3. Objections to the liquidation application. 4. Proceedings before the Hon’ble NCLAT. 5. Financial proposals and payments to creditors. 6. Management and supervision of the implementation of the resolution plan. 7. Reliefs, concessions, and dispensations sought by the Resolution Applicant. 8. Compliance with mandatory contents of the resolution plan under Section 30(2) of the IBC. Detailed Analysis: 1. Filing of Application for Liquidation of the Corporate Debtor: The Corporate Debtor was admitted into CIRP on 14.05.2018. The CoC was constituted on 06.06.2018. Despite several attempts to invite resolution plans, the CoC did not receive any viable resolution plan and thus, decided to file for liquidation under Section 33 of the Code. The application for liquidation was filed after the resolution plan was rejected by a 77.61% majority. 2. Approval of the Revised Resolution Plan: The revised resolution plan was submitted by M/s. Taguda Pte Ltd. and approved by the CoC with a 91.06% majority. The plan included a committed payment of INR 227 crores, with INR 225.14 crores allocated for the settlement of Financial Creditors, CIRP Costs, employee & workmen dues, Operational Creditors, and statutory liabilities. The plan also proposed converting unpaid debt into non-convertible redeemable preference shares. 3. Objections to the Liquidation Application: The Resolution Applicant objected to the liquidation application, arguing that the CoC erred in rejecting the resolution plan. The Tribunal dismissed the liquidation application and approved the resolution plan suo moto. 4. Proceedings before the Hon’ble NCLAT: The State Bank of India, as the lead member of the CoC, filed an appeal before the NCLAT, which stayed the implementation of the Tribunal's order and directed reconsideration of the revised resolution plan. The NCLAT granted six weeks for stakeholders to consider the revised plan, which was later extended. 5. Financial Proposals and Payments to Creditors: The resolution plan proposed detailed timelines and amounts for payments to Financial Creditors, Operational Creditors, and statutory liabilities. Key features included: - Upfront cash payment of INR 48.14 crores on the closing date. - Additional payments of INR 50 crores each on the 30th, 60th, and 90th days from the closing date. - Final tranche of INR 27 crores on the 120th day from the closing date. - Conversion of residual debt into non-convertible redeemable preference shares. 6. Management and Supervision of the Implementation of the Resolution Plan: The resolution plan provided for the constitution of an Interim Monitoring Agency (IMA) comprising four members (two from the Resolution Applicant and two from the CoC) to supervise the implementation of the plan and manage the company's operations. 7. Reliefs, Concessions, and Dispensations Sought by the Resolution Applicant: The Tribunal granted reliefs and concessions as per the Supreme Court judgment in Ghanshyam Mishra & Sons Vs Edelweiss Asset Reconstruction Company limited, extinguishing past liabilities not part of the resolution plan. However, statutory obligations/liabilities were not waived and would be dealt with by the appropriate authorities. 8. Compliance with Mandatory Contents of the Resolution Plan under Section 30(2) of the IBC: The resolution plan complied with Section 30(2) of the IBC, including: - Payment of CIRP Costs in full. - Payment of debts to Operational Creditors in priority over Financial Creditors. - Payment to dissenting Financial Creditors in priority. - Management and control of the company's affairs post-approval. - Implementation schedule and term of the resolution plan. Conclusion: The Tribunal approved the resolution plan, binding on all stakeholders, and discharged the Resolution Professional from duties. The plan's implementation would be supervised by the Resolution Applicant, with quarterly status reports to the Tribunal. The moratorium under Section 14 ceased, and the Resolution Applicant was granted access to the Corporate Debtor's records and premises. Non-compliance or withdrawal of the resolution plan would result in forfeiture of the performance security amount.
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