2020 (3) TMI 92 - Tri - Insolvency and Bankruptcy

Approval of a Resolution Plan - Section 30(6) of the Insolvency Bankruptcy Code, 2016 read with Regulation 39(4) of the Insolvency Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) 2016 - HELD THAT - The Resolution Plan in hand satisfies the minimum threshold of approval by 66% majority of the CoC. Hence, as per the CoC, the plan stands the requirement of being viable and feasible for revival of the Corporate Debtor. By and large, all the compliances have been done by the RP and the Resolution Applicant for making the plan effective after approval by this Bench. As far as the question of granting time to comply with the statutory obligations/seeking sanctions from governmental authorities is concerned, the Resolution Applicant is directed to do the same within one year as prescribed under section 31(4) of the I B Code - Further, in case of non-compliance of this order or withdrawal of Resolution Plan, the CoC shall forfeit the EMD amount already paid by the Resolution Applicant. Subject to the observations made in this Order, the Resolution Plan in question is hereby APPROVED by this Bench - The Resolution Plan is binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immediate effect and the Moratorium imposed under section 14 shall cease to have any effect henceforth.

Issues Involved:
1. Approval of Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016.
2. Appointment and actions of the Interim Resolution Professional (IRP) and Resolution Professional (RP).
3. Process and decisions of the Committee of Creditors (CoC) meetings.
4. Evaluation and selection of Resolution Plans.
5. Implementation and monitoring of the Resolution Plan.
6. Financial and operational restructuring of the Corporate Debtor.
7. Payment to creditors and cost of the Corporate Insolvency Resolution Process (CIRP).
8. Reliefs, concessions, and entitlements sought by the Resolution Applicant.
9. Compliance with statutory obligations and sanctions from governmental authorities.

Detailed Analysis:

1. Approval of Resolution Plan:
An application was moved by the Resolution Professional invoking Section 30(6) of the Insolvency & Bankruptcy Code, 2016, for approval of a Resolution Plan. The Tribunal passed an order as prescribed under Section 31(1) of the Code.

2. Appointment and Actions of IRP and RP:
The Financial Creditor filed a petition against the Corporate Debtor under Section 7 of the Code. The petition was admitted, and Mr. Santanu T. Ray was appointed as the IRP, later confirmed as the RP in the first CoC meeting. Actions taken by the RP included arranging factory visits, preparing the Information Memorandum, and appointing a Forensic Auditor.

3. Process and Decisions of CoC Meetings:
In the second CoC meeting, resolutions were passed for eligibility criteria, bid evaluation matrix, and the invitation for Expression of Interest (EoI). The RP published the EoI in newspapers, and the third CoC meeting extended the submission date for Resolution Plans. In subsequent meetings, Resolution Plans were evaluated, and the highest bidder was selected.

4. Evaluation and Selection of Resolution Plans:
The RP received EoIs from five Prospective Resolution Applicants. After evaluation, M/s. Euro Pratik Ispat (India) Private Limited emerged as the highest bidder with a financial bid of ?3.01 Crore, accepted by the CoC subject to certain modifications.

5. Implementation and Monitoring of the Resolution Plan:
The RP appointed valuers to determine the Fair Value and Liquidation Value of the Corporate Debtor. The modified Resolution Plan was submitted and approved by the CoC with a 100% voting share. The Resolution Plan included the infusion of ?3.10 Crore by the Resolution Applicant.

6. Financial and Operational Restructuring:
The Resolution Plan proposed to acquire 100% ownership and management of the Corporate Debtor as a "Going Concern." The total financial cost for the Resolution Applicant was ?3.01 Crore, with payments to Financial Creditors and no payments to Operational Creditors or employees due to lack of claims.

7. Payment to Creditors and Cost of CIRP:
The CIRP costs estimated at ?35,00,000 were to be paid in full and in priority. The Resolution Plan outlined the payment structure for Financial Creditors, including upfront and deferred payments.

8. Reliefs, Concessions, and Entitlements:
The Resolution Applicant sought various reliefs, including continuation of licenses, consents, and approvals, treatment of ongoing litigation, and exemptions from taxes and stamp duty. The Tribunal directed compliance with statutory obligations within one year and approved the Resolution Plan, making it binding on all stakeholders.

9. Compliance with Statutory Obligations:
The Tribunal directed the Resolution Applicant to comply with statutory obligations within one year as per Section 31(4) of the Code. In case of non-compliance or withdrawal of the Resolution Plan, the CoC was entitled to forfeit the EMD amount.

Conclusion:
The Tribunal approved the Resolution Plan, making it binding on the Corporate Debtor and other stakeholders. The "Moratorium" under Section 14 ceased to have any effect, and the RP was directed to hand over all records and premises to the Resolution Applicant. The Resolution Applicant was granted access to finalize actions required for starting operations, and the directions were effective from the date of the order.

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