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TMI Blog2019 (4) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... r passed by this Tribunal under Section 14 of the Code shall cease to effect and that the Resolution Professional shall forward all the record relating to the conduct of the corporate insolvency resolution process and the Resolution Plan to the Insolvency and Bankruptcy Board of India to be recorded on its database. Copy of this order be communicated to the Resolution Professional, Resolution Applicant, Financial Creditors and the counsel representing the guarantors of the suspended Board of Directors. - M.A. 1039/ 2018 in C.P.(IB)-1686(MB)/2017 - - - Dated:- 19-2-2019 - Shri. M.K. Shrawat, Member (Judicial) For The Petitioner : Ms. Ami Jain, Adv. ORDER 1. It is a Miscellaneous Application filed on 18.09.2018 by Mr. Manoj Kumar, Resolution Professional u/s 30(6) of IBC, 2016 to confirm and obtain an order on the successful Resolution Plan approved by the Committee of Creditors of the Debtor Company viz. The Rubber Products. Ltd. 1.1 The Rubber Products Ltd. (hereinafter, Corporate Debtor/ Corporate Applicant ) filed an application on 05.12.2017 u/s 10 of the Insolvency and Bankruptcy Code (IBC), 2016, read with Rule 7 of the Insolvency and Bankruptcy (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs Pvt Ltd; and 4) Wadhwa Group Holdings Pvt Ltd. The RP accordingly called the third CoC meeting on 09.05.2018 to take note of the revised information memorandum; the prospective resolution applicants and 2 more investors expressing interest after the last date indicated in EoI. The CoC decided to allow all six parties to submit their respective resolution plans. 6. The RP called the fourth CoC meeting on 06.06.2018 to inter alia decide on the extension of the CIRP period as the 180-day period for CIRP was to end on 01.07.2018. The agenda of the said meeting was also to hold meeting with the two Resolution Applicants who had submitted resolution plans for necessary discussion. In the meeting the CoC members tried to negotiate for the better terms to be incorporated in the Resolution Plan. This process took sometime, therefore, the CoC again resolved to seek further extension of CIRP period. As a consequence, a Miscellaneous Application (MA No. 593/2018) was moved, which was allowed vide Order dated 04.07.2018 and the period was extended for 90 days. i.e. till 30.09.2018. A miscellaneous application (MA 1039/2018) containing Resolution Plan as approved by the CoC was annexed, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems, Rubber Sheets, Rubber Hoses, Coated Fabrics. The company had a prestigious clientele of over 1000 companies, covering almost every sector of the industry, which included highly reputed private sector industries, and Public Sectors like Railway, Defence, Civil Aviation and Tele-communications and a rapid highway in exports, which contributed to 30% of the total turnover. It has been awarded with Export Award from IRMA for consistence export performance for successive years. The company s R D department is recognized by the Dept. of Science Technology and has continuously developed various innovative products. Its Quality Assurance Department has its own testing labs and is fully equipped to ensure 1005 quality control. It is informed that the said unit is under lockout since 28.08.2017. 9. BACKGROUND OF RESOLUTION APPLICANT Names of the Applicant Mr. Jagmeet Sabharwal Singh Mrs. Sheetal Jagmeet Sabharwal Max Spare Limited incorporated on 04/04/1967 Address 301-302, Quantum Park, Union Park, Pali Hill, Khar (West), Mumbai-400 052. 803- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty which will be increased to 100% by Sept 2018. The Company achieved its turnover of ₹ 60 Cr in FY 2018. d. Max Spare Ltd. (MSL) Max Spare Limited shall be the co-applicant. Max Spare Ltd was earlier known as Spareage Seals Ltd was established in 1959. It has been manufacturing engineering spare parts which are applicable for manufacturing Industries. Its turnover reached ₹ 111.04 Cr in FY 2017-18. It has 50,000 worth of patents and caters to all segments. It also exports its products and its export turnover in FY 18 was ₹ 28 Cr. The Company has two plants - At Thane and Khopoli. Both the plants have been running at 85 to 90% capacity utilisation. The company is headed by Mr. Jagmeet Sabharwal Singh. The promoters have been in this line of operation since 1959. The company was initially manufacturing only seals, later in the year 2009 company ventured into manufacture of V-belts with the acquisition of Nirlon V-belts holding a small share of approx. 6% in the total sales. The company commenced operations through manufacturing of rubber seals for domestic and overseas supply. It currently has two manufacturing facilities located at Khopoli and Thane for manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22,99,02,967 25,76,93,490 29,18,78,622 B Non-Current Liabilities Long Term Borrowings 11,64,37,955 8,49,14,853 6,16,24,800 Deferred Tax Liability - - - Other Long Term Liabilities 22,16,87,220 19,30,80,510 18,66,97,168 Long Term Provisions 33,81,25,175 27,79,95,363 24,83,21,968 C Current Liabilities Short Term Borrowings 18,77,41,183 21,52,92,810 24,19,10,479 Trades Payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,12,17,356 G Total Assets 84,54,62,397 83,31,47,169 87,84,65,065 10.1 The Rubber Products Ltd (Corporate Applicant/Debtor) has been in similar line of business that Max Spare Ltd. has been into. The unit of Rubber Products is suitable in terms of expansion of Max Spare Ltd. The clients of The Rubber Products Ltd will also become customers of Max Spare Ltd and will help boost sales of Max Spare Ltd. Max Spare Ltd has proficiency in acquisition of raw materials, labour, staff, utilities, etc. The acquisition of The Rubber Products Ltd will help increase the production and sales of Max Spare Ltd. This acquisition will also generate employment to labour and staff. It will also increase the revenue to the Govt. by developing this unit in terms of GST. 11. GIST OF RESOLUTION PLAN TOTAL DEBT AND AMOUNT OFFERED TO BE PAID (FORM H) 11.1 In the Resolution Plan submitted by the successful Resolution Applicant, means of finance to be arranged are as under: SOURCES OF FINANCING RESOLUTION PLAN Amount(Rs) I. Uns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 315.26 225.00 630.85 - 251.62 2625.00 11.3 FUNDS DISPENSATION PROPOSED UNDER RP (Rs. in Lakhs) Sl. No Nature 0-30 days 2-6 months 7-12 months 13-24 months 25-36 months 37 months Total A CIRP Cost 62.00 - - - - - 62.00 B Workmen Dues 234.20 - - - - - 234.20 C Employees Dues 65.68 - - - - - 65.68 D Statutory Dues 187.51 - - - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RPORATE DEBTOR 12.01 The list of Financial and Operational Creditors along with their respective claimed vis-a-vis admitted outstanding is attached with the Resolution Plan. Financial Creditors Sl. No. Name of the Crditor Amount Claimed Amount Admitted 1. State Bank of India 4,65,26,171 4,65,26,171 2. Sucharita Hegede 11,258,071 11,258,071 3. Sameer Sadanand Shetty 27,258,891 26,858,228 4. B Fouress Pvt. Ltd. 11,600,000 5,000,000 5. Fouress Engineering (I) Pvt. Ltd. 7,468,798 7,468,798 Total 10,41,11,931 9,71,11,268 Operational Creditors Sl. No. Name of the Creditors Amount Claimed Amount Adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.B. Brothers 331,803 230,508 23. Nyne Organics Pvt Ltd ( Note ii) 10,732,874 - 24. Ambika Enterprises 121,325 121,325 25. Fouress Engineering (I) Pvt. Ltd. 364,653 364,653 26. Security Guard Board for Brihan Mumbai Thane District 685,722 640,900 27. Tejak Chemicals 63,760 24,427 28. Ashwini Vaze Associates 67,400 43,200 29. Jain Vinay Associates 106,175 106,175 30. Advocate Shekhar M Shetty 715,168 715,168 31. Advocate Satish C Hegde 43,000 36,000 32. Sameer Apte Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine the liquidation value of the corporate debtor in accordance with Regulation 27 read with Regulation 35 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The details of fair and liquidation value are as depicted in the following table:- 1 Fair Value ₹ 30,38,19,397.85 (Average value determined by two valuers) 2 Liquidation value ₹ 19,66,46,250.30 (Average value determined by two valuers) 13.2 It is observed from the above table that as against the liquidation value of the assets and properties of the CD amounting to ₹ 19,66,46,250/- the successful RA undertaken in the resolution plan to accept and discharge the following liabilities:- Sl. No Nature 0-30 days A CIRP Cost 62,00,000 B Workmen Dues 2,34,19,799 C Employees Dues 65,67,521 D Statutory Dues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in force? ( a ) Section 4 (Point 4.1 - point A of table) and Table 15 ( b ) Section 4 (Point 4.1 - sub point B) and Table 16 ( c ) Section 8 (Point 8.1 subpoint b) ( d ) Section 8 (point 8.1 - subpoint (a) and Section 19 ( e ) NA ( a ) Yes ( b ) Yes ( c ) Yes ( d ) Yes ( e ) No Section 30(4) Whether the Resolution Plan ( a ) is feasible and viable, according to the CoC? ( b ) has been approved by the CoC with 66% voting share? - ( a ) Yes ( b ) Yes Section 31(1) Whether the Resolution Plan has provisions for its effective implementation plan, according to the CoC? Section 8 (point 8.1 - sub point a) and Section 19 Yes Regulation 35A Where the resolution professional made a determination if the corporate debtor has been subjected to any transaction of the nature covered under sections 43, 45, 50 or 66, before the one hundred and fifteenth day of the insolvency commencement date, under intimation to the Board? - Yes Regulation38 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Claim Amount: ₹ 2,21,76,152/- * Unclaimed amount: ₹ 12,43,647/- Total amount: ₹ 2,34,19,799/- Employee dues admitted claim amount - ₹ 56,41,775/- Out of upfront payment of ₹ 12,02,26,769/-, it is proposed to pay Employee dues as follows: * Admitted Claim Amount: ₹ 56,41,775/- * Unclaimed amount: ₹ 9,25,746/- Total amount: ₹ 65,67,521/- Note: * The Wages and Employees dues considered above does not include the liability for the period of strike/lock-out (period beginning from June 2017). * The liability for the period beginning from June 2017 till date is considered as con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If any interest element is included/claimed by the Operational Creditors then the interest amount claimed shall be waived off and the claim of Operational Creditors shall be discharged by payment of principal amount only. 2. Any pending amount which is not claimed by the operational creditor or any amount which is claimed by operational creditor in incorrect format shall be waived off and the company or the Resolution Applicant shall not be liable for payment of the same. 4 Tax/Statutory Dues/penalties/interest/Fines (Including TDS, EPF, VAT, Excise, ESIC/ FEMA/Companies Law, etc.) As per Regulation 38 of CIRP Regulations, liquidation value due to operational creditor shall be paid in priority to Financial Creditor within 30 days of approval of Resolution Plan by Adjudicating Authority. As per section 5(21) Statutory liabilities shall form part of Operational Debt. Out of upfront payment of ₹ 12,02,26,769/- statutory dues shall be discharged as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal amount due to unsecured financial creditors as proposed in the Resolution Plan. Shall be distributed to Equity Shareholders. As per the current estimated amounts, the total amount available for Equity Shareholders is ₹ 2,92,50,363/- * . Equity Shareholders shall be paid in two phases: Phase I: Out of upfront payment, Re 1 per share shall be paid to equity shareholders as part consideration for deemed share transfer to Resolution Applicants. Total amount paid shall be ₹ 40,88,400 only Phase II: Balance amount if any shall be paid within one month after the expiry of 3 years from approval of Resolution Plan by NCLT. As per the current estimates amount of *Rs 2,51,61,963/- shall be paid on interest free basis. Note: As per the audited balance sheet as on 31stMarch, 2017 amount of ₹ 78,000 on account of forfeiture of 15,300 shares due to non-receipt of share allotment money is not considered in the proposed resolution plan. * This amount available for distribution to Equity Shareholders would be reduced by; l any amount of claim by operational creditor other than those claimed and admitted by the Resolution Professional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Raju Bhandari 3,60,982 0 0 0 4 Sucharita Ramcrishna Hegde 1,43,790 0 0 0 5 Saurav Gupta 1,18,736 0 0 0 6 Fouress Investment Pvt. Ltd. 1,05,000 0 0 0 7 Nitya Media Private Limited 1,00,000 0 0 0 8 Kamal Kumar Goyal 74,044 0 0 0 9 Jyoti P. Mehta 65,120 0 0 0 10 Girdharilal V. Lakhi 51,550 0 0 0 11 Others - shares held by public 12,37,817 0 0 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess of revival. * On approval of resolution plan Income Tax officer is expected for reversal or withdrawal of all the disallowances and additions made in the Income tax assessment proceedings in the preceding eight years and returns as submitted to be treated as assessed and all carry forward losses and depreciation to be treated as allowed * Carried forward and brought forward losses shall be permissible as per Income tax Laws. * Income tax returns for any preceding financial year, if not filed as on date, then Adjudicating Authority is expected to permit the Resolution Applicant to file the returns on approval of Resolution Plan and income tax department to waive the penalty and interest for late filing of the said returns/ unpaid tax liability/demand to be totally waived off. * The Resolution Applicant propose to make payment for the claims received by the Operational Creditors to the extent admitted as per the list mentioned in the Information Memorandum in the manner as full and final settlement of Operational creditors liabilities. * In respect of claim of wages for the period of strike as well as lockout, since these disputes are pending before Industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the compliances required to relist the Equity Shares of the company and to relist the new structure of equity shares of the company immediately upon filing of the NCLT approval order shall be exempted by Stock exchanges in India. 17.0 Although this Resolution Applicant is seeking waiver in respect of number of liabilities, however, the same should be restricted to those government liabilities which are ascertained and crystallised as on the date when the CIRP commenced. On commencement of CIRP due to pronouncement of moratorium if any tax is levied, the same requires waiver. For rest of the tax demand a reliance is placed on a decision of NCLT, Chandigarh Bench in the case of State Bank of India vs. MOR Farms Pvt. Ltd. dated 15.06.2018 in CA Nos. 71/2018 171/2018 in CP(IB)- 51/Chd/Hry/2017 wherein waiver is granted in respect of tax dues. Although the question of waiver has been dealt with in this order by the respected Coordinate Bench, NCLT, Chandigarh. However, an important aspect is to be kept in mind that the petition in this case has moved u/s 10 of the Insolvency Code to declare itself insolvent. In other words, the Petitioner is seeking waiver in respect of all th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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