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2021 (4) TMI 577 - Tri - Insolvency and BankruptcyApproval of Resolution Plan - Section 30 (6) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 39 (4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016 - HELD THAT - Upon perusal of the approved Resolution plan, the Bench has observed that out of ₹ 150.70 crores of total Debt amount to various creditors, stakeholders the SRA proposed to pay ₹ 30.07 crores as the Final Resolution Amount i.e. approx. 20% of the total Resolution debt amount. Even out of this ₹ 12 crores will be generated through sale of assets of Non-Core Business of the CD thereby the SRA will bring in only ₹ 18 crores i.e 12% of the total outstanding Resolution Debt amount or approx. 60% of the Resolution Plan value. In case the SRA could not realise, monetise the said amount of ₹ 12 crores, how the shortfall will be met, alternate funding mechanism (time frame within which period the said amount will be paid) etc, are not provided in the CoC approved plan. However, the CoC after exercising its commercial wisdom approved the Resolution plan with requisite majority. The Resolution Plan has been approved by the CoC in the 12th meeting held on 09.11.2019 with 73.15% votes. In K Sashidhar v. Indian Overseas Bank Others 2019 (2) TMI 1043 - SUPREME COURT the Hon ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan as approved by CoC meets the requirements specified in Section 30(2). The Hon ble Court observed that the role of the NCLT is no more and no less - In COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS 2019 (11) TMI 731 - SUPREME COURT the Hon ble Apex Court clearly laid down that the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved. The instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A) and 39 (4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law - the resolution plan is approved. application allowed.
Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016. 2. Compliance with the Insolvency and Bankruptcy Code and related Regulations. 3. Evaluation and approval process by the Committee of Creditors (CoC). 4. Financial viability and funding sources of the Resolution Applicant. 5. Adjudicating Authority's role and limitations in approving the Resolution Plan. Detailed Analysis: 1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016: The Resolution Professional (RP) of Sejal Glass Limited sought approval for the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016, read with Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The RP submitted that the Plan had been approved by the Committee of Creditors (CoC) with a 73.15% voting share in favor. 2. Compliance with the Insolvency and Bankruptcy Code and related Regulations: The RP confirmed that the Resolution Plan complied with Section 30(2) of the Code, which includes: - Payment of insolvency resolution process costs in priority to other debts. - Payment of debts of operational creditors in a manner specified by the Board. - Management of the affairs of the Corporate Debtor after approval of the Resolution Plan. - Implementation and supervision of the Resolution Plan. - No contravention of any provisions of the law for the time being in force. The RP also provided a Compliance Certificate in Form-H showing the compliance of the Plan as required under the Code and Regulations. 3. Evaluation and approval process by the Committee of Creditors (CoC): The CoC evaluated the Resolution Plan submitted by Dilesh Roadlines Private Limited jointly with Mr. Surji D. Chheda & Ms. Chhaya S. Chheda. Despite initial concerns about the financial offer being less than the liquidation value, the CoC negotiated and approved the Plan with a 73.15% majority. The CoC's decision was based on their commercial wisdom, as emphasized by the Hon’ble Apex Court in various judgments. 4. Financial viability and funding sources of the Resolution Applicant: The Resolution Applicant proposed to raise funds through the sale of Non-Core Assets of the Corporate Debtor and additional infusions. The RP clarified the sources of funds, including the net worth and non-current investments of the Resolution Applicant, which were found to be satisfactory. The Plan proposed to pay ?30.07 crores out of the total ?150.70 crores of debt, with a significant portion to be generated from asset sales. 5. Adjudicating Authority's role and limitations in approving the Resolution Plan: The Adjudicating Authority's role is limited to ensuring that the Resolution Plan meets the requirements specified in Section 30(2) of the Code, as highlighted by the Hon’ble Apex Court in K Sashidhar v. Indian Overseas Bank and CoC of Essar Steel cases. The Authority cannot modify the Plan approved by the CoC in their commercial wisdom. The Resolution Plan was found to meet the necessary legal requirements and was not in contravention of any provisions of Section 29A of the Code. Conclusion: The Application IA No. 3690 of 2019 in CP 1799 of 2019 was allowed, and the Resolution Plan was approved. The Plan shall be binding on all stakeholders, and the moratorium under Section 14 of the Code shall cease. The RP is tasked with supervising the implementation of the Plan and reporting to the Authority. The Resolution Plan's approval does not waive any statutory obligations/liabilities, which must be addressed by the appropriate authorities.
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