2021 (12) TMI 1154 - Tri - Insolvency and Bankruptcy

Approval of Resolution Plan - Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - It is noted that CoC in its 18th meeting held on 13.01.2021 with 100% voting right approved the Resolution Plan submitted by the Resolution Applicant. It is also noted that Resolution Applicant is not a related party of the Corporate Debtor. Resolution Applicant has filed an affidavit dated 25.09.2020 regarding its eligibility to submit a Resolution Plan under Section 29A of IBC, 2016. Resolution Applicant has also provided the performance security amounting to ₹ 1,00,00,000 crore as a Bank Guarantee. All contents of the Resolution Plan and all documents/compliance certificates as required under Section 30(2) of IBC, 2016 read with Regulations 36 to 39 of CIRP Regulations, 2016 which have been placed on record is perused. The Resolution Plan complies with all these provisions. The total outstanding debt claims by all stakeholders stand at ₹ 11, 209.74 Lakhs and Resolution Applicant has admitted claims totalling ₹ 10,927.29 Lakhs and amount provided under the plan is 1,019.40 which amounts to 9.09%of total outstanding debt. The Resolution Plan so approved can be successfully implemented - Resolution Plan approved - application allowed.

Issues Involved:
1. Approval of Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016.
2. Compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016.
3. Reliefs and concessions claimed in the Resolution Plan.
4. Implementation and effectiveness of the Resolution Plan.
5. Extinguishment of liabilities and claims post-approval of the Resolution Plan.

Issue-wise Detailed Analysis:

1. Approval of Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016:
The Application was filed by Mr. Jitendra Kumar Jain, the Resolution Professional for Morakhia Copper & Alloys Pvt. Ltd., seeking approval of the Resolution Plan. The Corporate Debtor had been admitted into the Corporate Insolvency Resolution Process (CIRP) on 19.02.2020. The Committee of Creditors (CoC) was constituted with Reliance ARC and Bank of Maharashtra holding 58.74% and 41.26% voting shares, respectively. After multiple rounds of inviting Expressions of Interest (EOI) and evaluating various Resolution Plans, the CoC approved the Resolution Plan submitted by Shreenathji Rasayan Pvt. Ltd. with 100% voting in favor on 13.01.2021.

2. Compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016:
The Resolution Plan was examined and found to comply with all requirements under Section 30(2) of the IBC, 2016. The Resolution Applicant provided the necessary Performance Bank Guarantee of INR 1,00,00,000 as per Regulation 36B of CIRP Regulations, 2016. The Plan addressed the interests of all stakeholders, and the total admitted claims amounted to ?10,927.29 Lakhs, with the Plan providing ?1,019.40 Lakhs, which is 9.09% of the total outstanding debt.

3. Reliefs and Concessions Claimed in the Resolution Plan:
The Bench clarified that only reliefs and concessions within its authority, as per the Supreme Court's decision in M/s. Embassy Property Developments Pvt. Ltd. and Gujarat Urja Vikas Nigam Limited, would be granted. Specific reliefs and concessions granted included the extinguishment of liabilities of secured, unsecured, and operational creditors post-payment, and the extinguishment of claims from the suspended management, erstwhile directors, and shareholders. Encumbrances on the Corporate Debtor's assets would be removed, and the Resolution Applicant could review or terminate existing agreements.

4. Implementation and Effectiveness of the Resolution Plan:
The Resolution Plan would become effective from the date of the order. The moratorium order dated 19.02.2020 would cease to have effect. The Resolution Professional was directed to send copies of the order to participants and the Resolution Applicant and forward all records to the Insolvency and Bankruptcy Board of India. The Plan included provisions for forming a monitoring committee and a supervisory committee to ensure effective implementation.

5. Extinguishment of Liabilities and Claims Post-Approval of the Resolution Plan:
The order specified that all liabilities of stakeholders, including government and statutory authorities, would be extinguished post-approval. Contingent and unconfirmed dues would also be extinguished. The management of the Corporate Debtor would be handed over to a new Board of Directors nominated by the Resolution Applicant. The Resolution Applicant was required to obtain necessary approvals within one year or as specified by law. Shareholders' approvals for capital reduction and issuance of Compulsory Convertible Preference Shares (CCPS) would be deemed obtained, and the existing shareholders would cease to own shares immediately upon Plan approval.

Conclusion:
The Tribunal approved the Resolution Plan submitted by Shreenathji Rasayan Pvt. Ltd. The Plan complied with all statutory requirements, addressed the interests of all stakeholders, and included provisions for its effective implementation. The order extinguished various liabilities and claims, ensuring a fresh start for the Corporate Debtor under new management.

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