2019 (2) TMI 146 - AT - Insolvency and Bankruptcy

Rejection of resolution plan submitted by the 3rd Respondent Rajasthan Liquor Ltd. - Held that - The Resolution Professional has filed a report enclosing a copy of the modified resolution plan submitted by the 3rd Respondent. It is informed that all the Financial Creditors have been treated equally. Similarly, all the Operational Creditors have also been treated equally. No discrimination has been made between one or other Financial Creditor. Similarly, No discrimination has been made between one or other Operational Creditor. The Resolution Professional to place the modified resolution plan of the 3rd Respondent before the Committee of Creditors for its approval within fifteen days and Committee of Creditors in its turn will consider the viability, feasibility and financial matrix of the modified resolution plan submitted by the 3rd Respondent Rajasthan Liquor Ltd and vote accordingly. While exercising voting share, the Committee of Creditors shall keep in mind that the earlier resolution plan was approved by them. Appeal disposed off.

Summary

Issues:
1. Challenge to non-acceptance of resolution plan by Adjudicating Authority
2. Compliance with Section 30(2) of I&B Code
3. Treatment of creditors equally
4. Modification and approval of resolution plan

Analysis:

Issue 1: Challenge to non-acceptance of resolution plan by Adjudicating Authority
The Appellant, a Financial Creditor, challenged the judgment of the Adjudicating Authority which did not accept the resolution plan submitted by the 3rd Respondent. The Adjudicating Authority raised concerns regarding income tax liabilities and directed the Resolution Professional to modify the plan accordingly. The Appellate Tribunal directed the Resolution Professional to treat intra-group debt as equity contribution and ensure equal treatment of operational creditors without discrimination based on outstanding dues. The Tribunal set a deadline for the modified plan to be resubmitted for approval.

Issue 2: Compliance with Section 30(2) of I&B Code
The Appellant argued that the 3rd Respondent met all requirements of Section 30(2) of the I&B Code and relevant regulations, but this submission was not accepted during the initial hearing. Citing a previous judgment, the Tribunal emphasized that no discrimination should be made against creditors on any grounds. Consequently, the 3rd Respondent was granted time to submit a modified resolution plan.

Issue 3: Treatment of creditors equally
The Resolution Professional confirmed that all Financial Creditors and Operational Creditors were treated equally in the modified resolution plan. The Tribunal emphasized the importance of non-discrimination among creditors and directed the Committee of Creditors to consider the viability and feasibility of the plan, keeping in mind the earlier approved plan.

Issue 4: Modification and approval of resolution plan
The Resolution Professional was authorized to present the modified plan to the Committee of Creditors for approval within a specified timeframe. The Committee was instructed to evaluate the financial aspects of the plan and vote accordingly. Subsequently, the matter was to be presented to the Adjudicating Authority for final approval. The Tribunal excluded the period of case pendency from the total timeline for resolution proceedings.

In conclusion, the Appellate Tribunal addressed various issues related to the non-acceptance of a resolution plan, compliance with statutory provisions, equal treatment of creditors, and the modification and approval process, providing detailed directions and deadlines for the parties involved in the insolvency resolution process.