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2018 (9) TMI 206 - Tri - Insolvency and BankruptcyCorporate insolvency process - approval or rejection of the resolution plan, which was accepted by the committee of creditors with the requisite voting share - Held that - One of the contention raised by the learned senior counsel for ICICI Bank that the applicant Bank was forced to give assent to the resolution plan otherwise assent would have lead to the nil payment to the applicant bank in case of approval of the plan. This contention cannot be accepted as there are as many as 95 financial creditors being members of the COC and the voting share of ICICI Bank is only 1. 108%. The claim made by ICICI Bank was ₹166. 66 crores whereas the Resolution Professional accepted the claim to the tune of ₹139. 66 crores. So, even acceptance of the rest of the amount of claim to the tune of ₹27 crores would not bring any change in the voting pattern, the total amount of financial debt being ₹12, 604. 60 crores as is evident from the document Annexure A-8 attached with CA No. 114 of 2018. The resolution professional has also filed the compliance certificate under regulation 39 (4) of the Regulations by diary No. 2159, dated 13. 06. 2018. We allow CA and the resolution plan submitted by LHG Pte Limited is found to be in conformity with sub-section (2) of Section 30 of the Code and the same is approved with the modification that the timelines given in the resolution plan shall stand extended during the period, CA No. 114 of 2018 remained pending i. e. from 16. 04. 2018 upto the date of decision of the application. The application bearing CA which has been filed by the resolution professional for seeking clarification from this Tribunal stands disposed of as the non-disclosures of the associate companies by the Resolution Applicant in this case, has not been found to be fatal to the validity of the resolution plan and its implementation. It is further directed that the resolution plan so approved shall be binding on the Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. With the approval of the resolution plan, the moratorium order passed by this Tribunal under Section 14 of the Code shall cease to have effect. The Resolution Professional is directed to forward all the record relating to the conduct of the corporate insolvency resolution process and the resolution plan to the IBBI to be recorded on its database.
Issues Involved:
1. Approval or rejection of the resolution plan. 2. Eligibility of Liberty House Group (LHG) to submit the resolution plan. 3. Non-disclosure of connected persons by LHG. 4. Compliance of the resolution plan with the Insolvency and Bankruptcy Code and Regulations. 5. Objections raised by Deccan Value Investors (DVI) regarding the resolution process. Detailed Analysis: Approval or Rejection of the Resolution Plan: The applications were taken up together for disposal as they pertained to the approval or rejection of the resolution plan accepted by the Committee of Creditors (COC) with the requisite voting share. The resolution plan submitted by Liberty House Group PTE Ltd. (LHG) was approved by the COC with 93.89% voting share, later increased to 94.20% after additional votes. The resolution professional confirmed compliance with Section 30(2) of the Code and relevant regulations, and the plan was submitted before the Tribunal within the stipulated period. Eligibility of Liberty House Group (LHG) to Submit the Resolution Plan: The eligibility of LHG was questioned based on Section 29A of the Code, which disqualifies entities with accounts classified as non-performing assets (NPA) for more than one year. The Exim Bank, a member of the COC, did not raise any issue about LHG's eligibility during the COC meetings. However, a media report suggested LHG's ineligibility due to defaults by its connected entities. The resolution professional sought clarification from Exim Bank, which confirmed the default but noted that it was only for interest payments, not principal, and LHG had not guaranteed these loans. LHG provided evidence of dispute and subsequent payment of the dues, thus clearing the disqualification. Non-Disclosure of Connected Persons by LHG: LHG failed to disclose three entities (LITL 6, LITL 7, and LITL 18) whose accounts were NPAs. The Tribunal considered the non-disclosure in light of the large number of connected entities and the subsequent payment of dues. The non-disclosure was not deemed a deliberate act to avoid liability, and the Tribunal took a broad view to achieve the Code's objective of maximizing asset value. Compliance of the Resolution Plan with the Code and Regulations: The resolution plan met the requirements of Section 30(2) of the Code, including payment of insolvency resolution process costs, repayment to operational creditors, management of corporate debtor affairs, and compliance with existing laws. The resolution professional provided a certificate confirming compliance. The plan included provisions for statutory dues, operational creditors, and continuation of the corporate debtor as a going concern. The implementation and supervision mechanisms were detailed in the plan, and it required approval from the Competition Commission of India. Objections Raised by Deccan Value Investors (DVI): DVI challenged the approval of LHG's plan, alleging ineligibility and non-disclosure of connected persons. DVI argued that it would have been the only eligible bidder if LHG's ineligibility was known. The Tribunal found that DVI's objections were not substantial enough to overturn the COC's decision, especially given the payment of dues by LHG's connected entities and the overwhelming approval of the plan by the COC. Conclusion: The Tribunal approved the resolution plan submitted by Liberty House Group PTE Ltd., finding it in conformity with the Code and Regulations. The non-disclosure of connected entities was not considered fatal to the plan's validity. The objections raised by DVI were dismissed, and the approved plan was binding on all stakeholders. The moratorium order ceased to have effect, and the resolution professional was directed to forward the records to the IBBI.
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