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TMI Blog2018 (9) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... sick in terms of section 2(1)(o) of SICA. Business operations of the corporate debtor have remained suspended since August 2015 and the unit has been closed with effect from 1st July 2017. Subsequently M/s Amit Spinning Industries Limited filed an application under Section 10 of the Code read with Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiation of Corporate Insolvency Resolution Process in respect of the corporate debtor itself. The said application was admitted by this Bench vide order dated 01.08.2017 passed in CP (IB) No. 131 (PB)/2017 wherein moratorium was issued and Mr. Parveen Bansal bearing Registration. No. IBBI/IPA-001/IP- P00175/2017-18/10344 was appointed as Interim Resolution Professional. 4. Thereafter, public announcement in Form A as prescribed under Regulation 6 of the Regulations in Jan Satta, Financial Express and Free Press Journal on 03.08.2017 and in Maharashtra Times on 04.08.2017 were made by Interim Resolution Professional for intimation of commencement of corporate Insolvency Resolution Process of the Corporate Debtor and for calling the creditors to submit their claims along with the proof in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffer and the Resolution Applicants should deposit a sum of Rs. 50 Lakh in escrow account. Copy of the minutes of 4th meeting of CoC has been placed on record. 10. It is stated that as per the provisions of section 12(1) of the Code, the Corporate Insolvency Resolution Process was due for completion on 28.01.2018 and there was no time left for the members of CoC to consider the Resolution Plan proposed by the two Resolution Applicants. Therefore, the Resolution professional filed an application before the Tribunal under section 12(2) of the Code, requesting for extension of time of 50 days which was allowed on 29.01.2018 by the Tribunal under section 12(3) of the Code. 11. The 5th Meeting of CoC was held on 16.02.2018, wherein it was informed by the Resolution Professional that the Resolution Applicants who submitted their offers on the last meeting of CoC were invited to attend the meeting. M/s Bhavya Financial Services Limited has not shown any interest to peruse the proposal and M/s Tawade Patil & Associates have shown their inability to attend the meeting. However, they confirmed that last proposed offer continue to remain valid. Thereafter the members of CoC approved the eval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicants on 12-04-2018. 16. Subsequently, the Resolution professional requested to the resolution applicants to complete their due diligence and submit their unconditional and binding resolution plan without financial offer along with a demand draft of Rs. 50 lakhs by 16-04-2018. The Resolution plans without financial offer were received from all the resolution applicants and the same were circulated to members of committee of creditors on 17-04-2018. The resolution professional further requested to resolution applicants to submit their affidavits in compliance of section 29A of the Insolvency and Bankruptcy Code, 2016 for Declaration, information for verification of eligibility, information to support qualitative parameters of evaluation matrix by 13.04.2018. It is stated that most of the information / documents were received from all resolution applicants. 17. Thereafter the 8th meeting of CoC was held on 18-04-2018. The Resolution Professional invited all the resolution applicants to attend the meeting for submission of their resolution plans with financial offer and participate in the bidding process. 18. It has been stated that resolution applicants were invited to particip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and were requested to submit their revised resolution plan based on final bid amount. The Copies of minutes of 8th meeting, Revised Evaluation Matrix with assigned scores and bidding sheet have been placed on record. 23. Thereafter, the 9th meeting of CoC was held on 26-04-2018. Committee of creditors allocated the offered amount as follows: Sl. No. Head of Account Allocated Amount (Rs. Crores) 1. CIRP Cost 0.80 2. Due to Operational Creditors (Workers) 6.16 3. Due to dissenting creditors NIL 4. Secured Financial Creditor 22.04 29.00 24. The CoC decided for distribution among Axis Bank and JMF Assets Reconstruction Company Limited to allocate amount available for secured financial creditors in the ratio of 72.5% and 27.5% respectively. 25. Mr Deepak Chaganlal Choudhri and Mr Jitendra Goutamchand Chopra submitted their binding resolution plan to the committee of creditors, which was approved by Committee of creditors unanimously and the following resolution was passed: "RESOLVED THAT the Final Resolution Plan submitted to Resolution Professional by Mr. Deepak Chaganlal Choudhri and Mr Jitendra Kumar Chopra and presented to the committee of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of share capital will continue to be held by public shareholders. Resolution Applicants have sought exemption from the requirement of maintaining minimum shareholding for the period permitted by SEBI, waivers from seeking approvals for reduction in face value of equity shares and consolidation of equity shares. c. Resolution applicants has offered resolution amount of Rs. 29 crores and has offered to pay in two instalments: d. Workmen -Dues for 24 Months (estimated liability) (No proof of claim received) 12.39 6.16 6.23 Balance amount is sought to be waived off Wages and any unpaid dues owed to employees other than workmen for the period of 12 months preceding the liquidation commencement date (estimated liability) (admitted claim - Rs. 1.43 lakhs) 1.17 NIL 1.17 100% waiver sought Unsecured Financial Creditors (admitted claim - Rs. 41.61 crores 41.61 NIL 41.61 100% waiver sought. Statutory-Authorities (as per provisional balance sheet as on 01.08.2017) (No Proof of claim received) 0.53 NIL 0.53 100% waiver sought Other Operational Creditors (as per provisional balance sheet as on 01.08.2017-(admitted claims Rs. 56.67 crores) 70.03 NIL 70.03 100 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the best of my knowledge and belief that: 1. Resolution Applicants - Mr Deepak. Chaganlal Chaudhari resident of CNP No. 114 I, 272/1, Subhash Road, 9th Lane, Jaysingpur - 416101, Maharashtra having the experience and expertise in managing and operating the textile mills, which are in spinning, weaving and processing etc. since 2010 and Mr. Jitendra Kumar Chopra residents of C-2, Swapnil Apartment, Awade Nagar, Ichalkaranji, Kolhapur - 416115, Maharashtra are in the business of yarn manufacturing and fabric processing business since 2009. 2. I have examined the resolution plan received from Resolution Applicants to confirm and verify that the resolution plan provides for and is compliant to sub-clauses (a) to (I) of section 30(2) or The Insolvency and Bankruptcy Code, 2016. 3. I have examined the resolution plan of Resolution Applicants to confirm and verify that the resolution provides for all mandatory contents and provide for and comply to sub-regulations (a) to (c) of regulation 38 of The IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 4. 1 have verified that the resolution plan presented by Resolution Applicants include a statement as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e waived off. 12. That the resolution plan has provided for: a. The term of the plan and its implementation schedule; b. The management and control of the business of the corporate debtor during the term of resolution plan shall lie with the resolution applicant and the persons nominated by it for running day to day operations of the Corporate Debtor. c. adequate means for supervising its implementation during the resolution plan. 13. The resolution plan does not contravene any provisions of the law for the time being in force. 14. We have relied on financial information including statements and reports furnished to us after taking a confirmation from the management of the corporate debtor. 15. Any factual information provided herein appears to be accurate, complete and up to date. 16. I have submitted to the committee the resolution plans which comply with the requirements of the Code and the regulations made thereunder. 17. The corporate debtor has insignificant operations during the last two years and the transactions in the bank accounts were also minimal and were fully explained by the key managerial personnel of the corporate debtor. We have overviewed the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, reject the resolution plan. (3) After the order of approval under sub-section (1),- (a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease to have effect; and (b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database. (4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub - section (1) or within such period as provided for in such law, whichever is later." (Emphasis given) 31. Therefore, before approving the Resolution Plan, the Code mandates the Adjudicating Authority to ensure that, (1) the Resolution Plan meets the requirements of Section 30(2) of the Code and (2) the resolution plan has provisions for its effective implementation. 32. In respect of compliance of point (1) above, it is necessary to refer to sub-section (2) of Section 30 of the Code w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or our approval. 34. It is pertinent to record here that no one has come forward to object the Resolution Plan. However, in terms of section 31(1) of the Code, Adjudicating Authority has also to examine whether the requirements of sub-section (2) of Section 30 have been complied with or not. 35. Firstly, the resolution plan approved by the CoC must provide for the payment of insolvency resolution process cost in a manner specified by the Board in priority to the payment of other debts of the corporate debtor. A perusal of the resolution plan reveals that an amount of Rs. 80 Lakhs has been allocated to meet payment of Corporate Insolvency Resolution Process Cost, which will be paid in priority to any other creditor. The Resolution professional additionally has certified that the resolution plan has provided for payment of insolvency resolution process costs in a manner specified by the Board in priority to the repayment of other debts of the corporate debtor in compliance to Regulation 38(l)(a) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The source of payment of CIRP Cost has been identified and the payment would be made in priority to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of resolution plan. Mr Jitendra Kumar Goutamchand Chopra and Mr Deepak Chaganlal Choudhari has been proposed to be appointed as Managing Director and joint Managing Director respectively and Mrs Sharmila Devi J Chopra will be the Non-executive Director on the Board. It has been stated that the objective of resolution applicant is to settle the liabilities and claims of corporate debtors and to resume the production of yarn at the unit. Therefore, we find that the third requirement has also been fulfilled. 38. The fourth condition envisaged by Section 32(2)(d) is that it must provide for the implementation and supervision of the resolution plan. As per the Resolution Plan, the term of the resolution plan will be 4 months and there is provision for a Monitoring Committee (MC) comprising of existing Resolution Professional and 1 representative each from Axis Bank Ltd and J M Financial Asset Reconstruction Company Ltd, for supervision of implementation of the Resolution Plan. Cost of supervision will be paid by Corporate Debtor / Resolution Applicants. The Resolution Professional has certified that the Resolution Plan provides for term of the plan, its implementation schedule, the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bilities and claims of corporate debtors to the extent mentioned in the Resolution Plan and to resume the production of yarn at the unit. Resolution Applicant have proposed to appoint three directors out of which 1 will be Non-executive Director and 2 will be Executive Directors from the date of approval of resolution plan. Mr Jitendra Kumar Goutamchand Chopra and Mr Deepak Chaganlal Choudhari has been proposed to be appointed as Managing Director and joint Managing Director respectively and Mrs Sharmila Devi J Chopra will be the Non-executive Director on the Board. Resolution Applicant has also proposed to acquire 90 % of ownership of the corporate debtor after restructuring of share capital / allotment of share. Balance 10% of share capital will continue to be held by public shareholders as mentioned in detail in the plan. It is relevant to note here that 'Explanation' in sub-section (2) of Section 30 provides deemed approval of shareholders for implementations of actions under the Resolution Plan, making it clear that it shall not be a contravention of law. Though Resolution applicant shall manage the affairs of the company, but the Plan restrain the resolution applicant to sell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53. Moreover, the Resolution Plan has been unanimously approved by the CoC and has been submitted in compliance of Section 30 of the Code for approval. Resolution Professional has confirmed that the Resolution Plan is compliant to sub-section (a) to (f) of Section 30(2) of the Code and also comply Regulation 38 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. He has further certified that it has dealt with the interests of all stake holders. 54. Besides there is no objection from any stake holders in respect of approval of the resolution Plan. 55. In absence of any discrimination or perverse decision it is not open to the Adjudicating Authority to modify the Plan. As per the provisions of the Code, the CoC with the requisite super majority is the competent authority to decide on the rights of various stakeholders by approving a resolution Plan. Adjudicating Authority is not expected to substitute its view with the unanimous commercial wisdom of the CoC nor should deal with technical complexity and merits of Resolution Plan unless it is found contrary to the express Provisions of law and goes against the public in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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