2020 (3) TMI 1007 - Tri - Insolvency and Bankruptcy

Calling of CoC meeting - consideration of proposal of the resolution applicant dated July 25, 2019 - section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The e-mail which it sent dated July 25, 2019 by the resolution applicant is merely the revised commercial offer on the rejected plan submitted on July 18, 2019 which was rejected by the CoC and not a resolution plan in accordance with the provisions of the Code read with the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ( CIRP Regulations ) and per the judgment of hon'ble apex court in ArcelorMittal India P. Ltd. v. Satish Kumar Gupta 2018 (10) TMI 312 - SUPREME COURT the Adjudicating Authority has no jurisdiction to challenge the commercial wisdom of CoC to approve or reject the resolution plan . Further, the e-mail sent by the resolution applicant states that the necessary changes shall be made to the resolution plan and the revised resolution plan shall be submitted shortly which has not taken place and it is admitted by the resolution applicant that merely a revised offer and not a resolution plan to be considered. It is also to be considered that by allowing one resolution applicant to submit resolution plan even after its plan has got rejected will be in con travention of the law laid down by the hon'ble Supreme Court in Arce lorMittal India P. Ltd. v. Satish Kumar Gupta as the resolution plan was submitted in April, 2019 and there were other resolution applicants also who showed interest in the resolution pro cess. After the rejection of the resolution plan submitted by SREI, it would only be equitable that the resolution process is open for all resolution applicant in order to maximize the recovery for the creditors of the cor porate debtor. Application dismissed.

Summary

Issues:
Application under section 60(5) of the Insolvency and Bankruptcy Code, 2016 to call for CoC meeting and consider resolution plan.

Analysis:
The application was filed by the resolution applicant against the RP of JVL Agro Industries Ltd. to convene a CoC meeting and review the proposal dated July 25, 2019. The applicant modified the resolution plan multiple times based on negotiations with the CoC and RP. The revised proposal of ?401 crores was submitted within the CIRP period, but the RP failed to conduct the CoC meeting to discuss it, even when some lenders were willing to consider it. The applicant argued that the RP's action of filing for liquidation instead of presenting the revised proposal to the CoC was contrary to the objectives of the Code, which aim for the resolution of the corporate debtor to maintain its operations and save jobs.

The RP contended that the resolution plan submitted by the applicant was rejected by the CoC with a 71.1% vote. The CoC was informed of the rejection, concluding the process for consideration. The RP clarified that the applicant's email of July 25, 2019, was a revised commercial offer on the rejected plan and not a new resolution plan. The CoC's decision was not solely based on commercial terms but also on feasibility, viability, and the applicant's commitment to implementing the plan.

The Adjudicating Authority noted that the applicant's email was not a resolution plan as per the Code and CIRP Regulations. The Authority emphasized that a standalone commercial offer cannot be considered a resolution plan without mandatory contents and due diligence. Allowing the applicant to resubmit a plan after rejection would go against the Supreme Court's precedent, indicating that the resolution process should be open to all potential applicants to maximize creditor recovery.

Therefore, the application was dismissed based on the observations made, highlighting that the revised offer was not a resolution plan and did not meet the necessary requirements. The Authority emphasized the need for adherence to legal provisions and the equitable treatment of all potential resolution applicants.