2021 (5) TMI 10 - Tri - Insolvency and Bankruptcy

Revision of Resolution Plan - exclusion of time period from the date of rejection of the Applicant's request by the RBI i.e. August 19, 2020 till the date of order of this Tribunal, from the calculation of the timelines envisaged under the approved resolution plan - seeking to enable the applicant to comply with the implementation of the Resolution Pan approved - HELD THAT - It is seen that what sought for by the Applicant is not a modification of the Resolution Plan which was approved by this Tribunal on 20.07.2020; the Applicant has only sought for the change in the funds infusion mechanism and change in the shareholding pattern. It is also pertinent to observe that none of the stakeholders, including the Monitoring Committee, have raised any objections to the revisal as sought for by the Applicant herein. The Learned Senior Counsel Mr. Arvindh Pandian, appearing on behalf of R1/Monitoring Committee categorically states that There is no bar for ARC to participate as Resolution Applicant . Furthermore, there is no change or modification regarding allocation of funds. The stakeholders of the Corporate Debtor are not affected by this change of infusion of fund sought by the Applicant. The approved Resolution Plan can be implemented in toto. This application seeks for change of shareholding pattern, and infusion of funds, and takeover of debt, between the Resolution Applicants. Since there is no bar as per RBI guidelines and further stakeholders are not affected, this application may be allowed - keeping in mind the preamble to Insolvency and Bankruptcy Code, 2016, this Adjudicating Authority deems it fit to approve the revisions in the Approved Resolution Plan as sought for by the Applicant in order to protect the best interest of all the stake holders of the Corporate Debtor. Accordingly, revision of the resolution plan as regards the amended shareholding pattern necessitated on account of the changed infusion mechanics and the assignment of the debts as observed herein above earlier is permitted to be carried out without affecting the rights of the stakeholders to the resolution process, which includes achieving resolution for the Corporate Debtor and value maximization of its assets as well as the interest of stakeholders - no material terms of the Approved Resolution Plan are sought to be altered and all terms of the Approved Resolution Plan in relation to the rights of the stakeholders are preserved without any modification and all statutory requirements would be complied with for implementation of the Approved Resolution Plan. In exercise of powers conferred under Rule 11 of NCLT Rules, 2016, this Adjudicating Authority hereby exclude the period between 19.08.2020 (rejection of request of UVARC for equity infusion by RBI) and the date of passing this order stands excluded from the timelines for implementing the approved resolution plan in the revised form - Application allowed.

Summary

Issues Involved:
1. Revision of the resolution plan regarding the amended shareholding pattern.
2. Exclusion of time period from the date of RBI's rejection to the date of the Tribunal's order.
3. Implementation of the approved resolution plan with necessary revisions.
4. Compliance with RBI guidelines for Asset Reconstruction Companies (ARCs).

Issue-wise Detailed Analysis:

1. Revision of the resolution plan regarding the amended shareholding pattern:
The applicant, a consortium of UV Asset Reconstruction Company Limited (UVARC) and WL Structures Private Limited (WLSPL), sought to revise the resolution plan to amend the shareholding pattern due to changed infusion mechanics. The applicant proposed that the entire equity infusion into the Special Purpose Vehicle (SPV) be done directly by WLSPL from its internal accruals, instead of UVARC. This change was necessary because the RBI did not permit UVARC to directly infuse funds into the SPV. The Tribunal noted that the proposed change in the shareholding pattern was permissible under the approved resolution plan and did not alter any treatment accorded to creditors. The Tribunal approved the revisions, emphasizing that the changes were administrative and did not affect the stakeholders' rights.

2. Exclusion of time period from the date of RBI's rejection to the date of the Tribunal's order:
The applicant requested the exclusion of the time period from August 19, 2020 (the date of RBI's rejection) to the date of the Tribunal's order from the calculation of the timelines envisaged under the approved resolution plan. The Tribunal acknowledged the delay caused by the RBI's rejection and the peculiar circumstances due to the COVID-19 pandemic. Invoking Regulation 40(C) and Rule 11 of NCLT Rules, 2016, the Tribunal excluded the specified period from the timelines for implementing the resolution plan.

3. Implementation of the approved resolution plan with necessary revisions:
The applicant emphasized its commitment to implementing the approved resolution plan and making the necessary payments within the prescribed timelines. The Tribunal directed the applicant to adhere strictly to the implementation schedule and take necessary steps to implement the plan within the timelines. The Tribunal noted that the proposed changes were for the benefit of all stakeholders, including operational creditors, workmen, and employees, and would ensure the revival and continuation of the corporate debtor's business.

4. Compliance with RBI guidelines for Asset Reconstruction Companies (ARCs):
The applicant contended that there was no bar for ARCs to participate as resolution applicants under the Insolvency and Bankruptcy Code (IBC), 2016, but ARCs must obtain RBI approval for fund infusion and equity participation. The Tribunal examined various RBI notifications and guidelines and concluded that there was no prohibition against ARCs participating as resolution applicants. The Tribunal also noted that the proposed changes did not affect the allocation of funds or stakeholders' rights and were in compliance with statutory requirements.

Conclusion:
The Tribunal allowed the revision of the resolution plan regarding the amended shareholding pattern and the changed infusion mechanics. It excluded the time period from the date of RBI's rejection to the date of the Tribunal's order from the implementation timelines. The Tribunal emphasized the importance of timely implementation of the resolution plan to protect the interests of all stakeholders and ensure the corporate debtor's revival and continuation. The application was allowed with the specified directions.