2019 (8) TMI 828 - AT - Insolvency and Bankruptcy

Approval of Resolution plan - feasibility and viability of the resolution plan - Appellants also earlier raised the question of ineligibility of the resolution applicant , which was not accepted by this Appellate Tribunal and the appeals preferred by the two Appellant Banks were dismissed as withdrawn without any liberty to raise such issue again before this Appellate Tribunal - HELD THAT - As the Committee of Creditors , by majority voting share of 78.50%, has approved the plan after taking into consideration the techno economic report relating to viability and feasibility of the resolution plan and viability of the Corporate Debtor , this Appellate Tribunal cannot sit in appeal in absence of any discrimination or unequal treatment of similarly situated Financial Creditors or Operational Creditors . Appeal has no merits - appeal dismissed.

Summary

Issues Involved:
1. Eligibility of the Resolution Applicant under Section 29A(h) of the I&B Code.
2. Viability and feasibility of the resolution plan.
3. Liquidation value and proposed payments to creditors.
4. Approval of the resolution plan by the Committee of Creditors (CoC) with requisite majority.
5. Exclusion of 106 days for counting the resolution period.

Issue-wise Detailed Analysis:

1. Eligibility of the Resolution Applicant under Section 29A(h) of the I&B Code:
The appellants argued that the resolution applicant, Mr. Anjanee Kumar Lakhotia, was ineligible under Section 29A(h) of the I&B Code as he was a personal guarantor to RBL Bank Limited, which initiated the Corporate Insolvency Resolution Process (CIRP) against MBL Infrastructures Limited. The personal guarantee had been invoked by RBL Bank Limited on January 23, 2017. Similar claims were made regarding his personal guarantees to State Bank of India and IDBI Bank. However, the resolution applicant denied ineligibility, stating that MBL Infrastructure Ltd. had a clean record and that the financial constraints were due to external factors like non-release of sanctioned limits by banks and delays in receivables.

2. Viability and Feasibility of the Resolution Plan:
The appellants questioned the viability and feasibility of the resolution plan, highlighting that the liquidation value of the Corporate Debtor was ?269.90 Crores, excluding ?1708.03 Crores realizable from debtors/cash accruals/sale of investments. They argued that the proposed infusion of ?128.30 Crores against a total payment of ?1890 Crores under the resolution plan was insufficient. The appellants also noted that the repayment to financial creditors was proposed at 25.70% in cash over 8.5 years and 74.30% in non-convertible debentures redeemable after 8 years, which they found unviable.

3. Liquidation Value and Proposed Payments to Creditors:
The appellants contended that the total debt of financial creditors was ?1480.17 Crores, and the proposed repayment percentages were inadequate. They also pointed out that the total upfront payment to financial creditors was ?59.86 Crores, excluding non-convertible debentures worth ?1188.34 Crores. Additionally, the total debt of operational creditors was ?157.91 Crores, with no upfront payment shown for a sum of ?70.28 Crores proposed for payment (excluding statutory dues). They argued that the resolution plan did not meet commercial viability.

4. Approval of the Resolution Plan by the Committee of Creditors (CoC) with Requisite Majority:
The appellants argued that the resolution plan was initially approved by a 68.50% voting share, which was insufficient as per the then-applicable provisions of the I&B Code. However, after subsequent meetings and the inclusion of votes from Indian Overseas Bank and Bank of Maharashtra, the plan was approved with a 78.50% voting share. The Adjudicating Authority excluded 106 days from the resolution period due to litigation and non-progress of the CIRP, which facilitated the approval of the resolution plan.

5. Exclusion of 106 Days for Counting the Resolution Period:
The Adjudicating Authority excluded 106 days from the resolution period for counting the 270 days, considering the period of litigation and non-progress of the CIRP. This exclusion allowed the resolution plan to be considered within the permissible period.

Conclusion:
The Appellate Tribunal found no merit in the appeals, noting that the Committee of Creditors (CoC) had approved the resolution plan with a 78.50% voting share after considering the techno-economic viability and feasibility reports. The Tribunal emphasized that it could not sit in appeal in the absence of any discrimination or unequal treatment of similarly situated financial or operational creditors. The appeals were dismissed with no costs.