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TMI Blog2019 (12) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... was appointed as the Interim Resolution Professional ("IRP") of the Corporate Debtor. (2) Consequent to his appointment as IRP, the Applicant herein issued a public announcement on November 12, 2018 in terms of Regulation 6(l) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations"), inviting claims from all stakeholders. (3) The Applicant/ IRP collated and verified claims received up to November 23, 2018 and constituted the Committee of Creditors ("COC") as per Regulation 17(1) of the CIRP Regulations, on November 30, 2018 as under. Pursuant to which, report for constitution of COC was filed in this Tribunal complying the provisions of the IBC read with regulation 17(l) of the CIRP Regulations. (a) IDBI Bank Limited; (b) Standard Chartered Bank; (c) Oriental Bank of Commerce; (d) Axis Bank Limited; (e) Indian Overseas Bank; (f) State Bank of India; (g) Punjab National Bank; (h) Edelweiss Asset Reconstruction Company Limited (EARC); (i) Central Bank of India; (j) UCO Bank; (k) India Opportunities; (l) Bank of India; (m) Assets Care and Reconstruction Enterprise Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... COC held on March 6, 2019, the COC unanimously extended the last date for submissions of EOI to March 13, 2019. Further CoC agreed to issue Request for Resolution Plans along with the Evaluation Matrix. 7. At the fourth meeting of the COC held on March 28, 2019 the COC rejected the term sheet submitted by the Deutsche Bank AG for a facility of Rs. 345,00,00,000/-(Rupees Three Hundred and Forty Five Crores). 8. In the 5th COC meeting held on April 15, 2019, the COC extended the timeline for submission of resolution plan from April 18, 2019 to May 17, 2019. Further since CIRP period was ending on 08.05.2019, this Tribunal extended the period by another 90 days from 08.05.2019 based on the application filed under section 12(2) of the Code. 9. At the sixth meeting of the COC held on May 17, 2019, CoC was apprised by Resolution Professional about the extension of CIRP granted by this Tribunal till August 6, 2019 and also with respect to the submission of the resolution plan by the Resolution Applicant. Copy of the minutes of 6th COC meeting held on May 17, 2019 is annexed and marked as Annexure "H". Pursuant to the extension of timeline the Applicant received 1 (One) resolution pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Bank 884,76,35,777 884,76,35,777 - Yes 3 Oriental Bank of Commerce 382,12,97,017 382,12,97,017 - Yes 4 Axis Bank Limited 341,12,00,492 341,12,00,492 - Yes 5 Indian Overseas Bank 330,81,53,947 330,81,53,947 - Yes 6 State Bank of India 225,60,80,776 225,60,80,776 - Yes 7 Punjab National Bank 205,02,05,879 205,02,05,879 - Yes 8 Edelweiss Asset Reconstruction Company Ltd. 175,32,89,723 175,32,89,723 - Yes 9 Central Bank of India 147,17,25,277 147,17,25,277 - Yes 10 UCO Bank 114,60,78,418 114,60,78,418 - Yes 11 India Opportunities III Pte Ltd 104,68,39,860 104,68,39,860 - Yes 12 Bank of India 78,24,81,002 78,24,81,002 - Yes 13 Assets Care and Reconstruction Enterprise Limited 73,13,98,337 73,13,98,337 - Yes 14 Punjab & Sind Bank 52,31,65,953 52,31,65,953 - Yes 15 Andhra Bank 8,89,56,800 - 8,89,56,800 No security claimed Total 4747,19,02,738 4738,29,45,938 8,89,56,800 The admitted claims are inclusive of Corporate Guarantee of Rs. 6,67,69,12,147 provided by the Company for facilities availed by group entities. Sl. No. NAME OF THE FINANCIAL CREDITOR (RELATED PARTIES) AMOUNT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahindra & Mahindra Limited 14,69,74,692 3,81,11,274 - 10,88,63,418 19 Punjab Transport Company 14,26,62,371 9,77,14,887 4,49,47,484 - 20 Chennai Radha Engineering Works Pvt. Ltd. 13,33,50,956 8,77,54,903 4,55,96,053 - 21 Mcnally Bharat Engineering Co. Ltd. 12,73,97,847 11,51,25,090 1,22,72,757 - 22 Balaji Associates 11,80,99,391 8,14,02,950 3,66,96,441 - 23 Mahindra Vehicle Manufacturers Limited 7,80,60,528 - - 7,80,60,528 24 Kjsl Coal and Power Pvt. Ltd. 7,00,00,000 7,00,00,000 - - 25 Refex Industries Limited 6,69,28,846 6,69,28,846 - - 26 Shree Agarwal Coal India Pvt. Ltd. 5,58,96,250 2,47,69,717 3,11,26,533 - 27 Ramsons Industries Limited 5,46,16,485 - 1,37,17,314 4,08,99,171 28 Central Railways, Nagpur Division 4,40,13,029 2,19,92,353 2,20,20,676 - 29 Encotec Energy India (Pvt.) Ltd. 4,27,99,597 - 4,27,99,597 - 30 Scop Infrastructure & Co. 3,30,47,768 1,01,08,512 2,29,39,256 - 31 Ramsons Casting Private Limited 3,20,58,219 - 1,05,51,785 2,15,06,434 32 Ambuja Cements Limited 2,31,38,441 2,29,16,937 2,21,504 - 33 Swami Fuels Pvt. Ltd. 2,14,00,311 1,29,20,417 84,79,894 - 34 Coal Feeder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71 Gaurav Heavy Engineering Pvt. Ltd. 9,09,392 6,63,760 2,45,632 - 72 Qingdao Shuanglihua Mechanical & Electrical Co. Ltd. 8,37,563 5,84,856 2,52,707 - 73 Rolon Seals 7,26,772 7,26,772 - - 74 Ranadeep Transport 6,59,863 6,31,887 27,976 - 75 Deloitte Haskins and Sells 6,23,538 6,23,538 - - 76 Patel Erectors 5,97,191 4,85,102 1,12,089 - 77 Ferrocare Machines Pvt. Ltd. 4,71,270 4,71,270 - - 78 SJ Patel Industries 4,58,620 4,52,202 6,418 - 79 Amit M Lahoti 4,25,980 - 4,25,980 - 80 Pest Control Ideal 3,96,380 2,06,500 1,89,880 - 81 Pacific Bearings Pvt. Ltd. 3,84,698 3,56,355 28,343 - 82 Shree Ganesh Hospitality Services 3,37,213 86,790 2,50,423 - 83 Shree Padmalaya Petroleum Servo 3,34,841 2,61,174 73,667 - 84 Padmalaya Enterprises 2,99,130 2,99,130 - - 85 PCI Pest Control Private Limited 2,97,397 2,97,397 - - 86 Maharashtra Scientific Emporium 2,72,863 2,36,551 36,312 - 87 Storewell Industries 2,72,000 1,83,301 88,699 - 88 Guru Nanak Workshop Services Pvt. Ltd. 2,62,496 - 2,62,496 - 89 Kelvion India Pvt. Ltd. 2,59,896 2,59,896 - - 90 Powermine Corporation 2,37,361 1,30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. No. NAME OF THE OTHER CREDITOR AMOUNT CLAIMED (Rs) CLAIM ADMITTED (Rs) CLAIM NOT ADMITTED (Rs) CONTINGENT CLAIMS (Rs) 1 Baekart Industries Limited 14,97,37,854 - 2,47,65,580 12,49,72,274 (d) There are 136 workmen or employees in the Corporate Debtor and amount of their claim is Rs. 2,64,95,405/-, out of which Rs. 1,66,97,405/- only was admitted. 15. The COC comprises of the following members having voting share as defined under Section 5(28) of the Code is mentioned against as on 02.08.2019:- Sl. No. NAME OF THE FINANCIAL CREDITOR CLAIMED AMOUNT (Rs) CLAIMED AMOUNT VERIFIED (Rs) VOTING SHARE (Rs) 1 IDBI Bank Limited 16,23,33,93,479.76 16,23,33,93,479.76 34.26% 2 Standard Chartered Bank 8,84,76,35,777.37 8,84,76,35,777.37 18.68% 3 Oriental Bank of Commerce 3,82,12,97,017.03 3,82,12,97,017.03 8.06% 4 Axis Bank Limited 3,41,12,00,491.77 3,41,12,00,491.77 7.20% 5 Indian Overseas Bank 3,30,81,53,946.80 3,30,81,53,946.80 6.98% 6 State Bank of India 2,25,60,80,776.27 2,25,60,80,776.27 4.76% 7 Punjab National Bank 2,05,02,05,878.72 2,05,02,05,878.72 4.33% 8 Edelweiss Asset Reconstruction Company Limited 1,75,32,89,723.30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight Lakhs Eighty Two Thousand Three Hundred Thirty One Only). ("Outstanding Financial Debt"). (ii) The details of the total outstanding operational debt of the Corporate Debtor admitted and not contingent, towards its Operational Creditors, as of July 20, 2019, is INR 325,66,81,348 (Rupees Three Hundred Twenty Five Crores Sixty Six Lakhs Eighty One Thousand Three Hundred Forty Eight Only) ("Admitted Outstanding Operational Debt") and the total outstanding operational debt of the Corporate Debtor which is contingent on pending legal proceedings towards its Operational Creditors, which is contingent on pending legal proceeding, as of July 20, 2019, is INR 1519,02,37,570 (Rupees One Thousand Five Hundred Nineteen Crores Two Lakhs Thirty Seven Thousand Five Hundred Seventy Only) ("Contingent Outstanding Operational Debt"). The Admitted Outstanding Operational Debt and Contingent Outstanding Operational Debt are hereinafter collectively referred to as the Outstanding Operational Debt. (iii) As per the terms of the Resolution Plan, a total amount of INR 635,00,00,000 (Rupees Six Hundred And Thirty Five Crores Only) is proposed to be paid to the financial creditors (excluding financi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the Effective Date, the Corporate Debtor can choose to substitute part or whole of the Residual Debt through internal accruals, fresh borrowings or additional capital infusion by the Resolution Applicant. Such prepayment shall not entitle any prepayment premium. (v) As per the Resolution Plan, INR 25,00,00,000 (Rupees Twenty Five Crores Only) ("Non-Financial Creditor Allocated Amount") is proposed to be earmarked for payment of the insolvency resolution process cost ("CIRP Cost"), dues to workmen and employees, statutory liabilities including outstanding governmental authority dues, taxes, etc. and operational creditors including other creditors. (vi) Out of the Non-Financial Creditor Allocated Amount, the CIRP Cost and an amount of INR 1,66,97,405 (Indian Rupees One Crore Sixty Six Lakhs Ninety Seven Thousand Four Hundred and Five), i.e., the entire amount of admitted claim of workmen and employees will be paid out in priority. The remaining amount ("Operational Creditors and Other Creditors Allocated Amount") will be distributed among other operational creditors of the Corporate Debtor in the manner set out in the Resolution Plan. (vii) If the liquidation value payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be met out of the accruals of the Corporate Debtor and to the extent the internal accruals are not sufficient to meet the aforesaid costs and expenses, the same shall be paid from the Operational Creditors and Other Creditors Allocated Amount. Within 2 business days from the approval of this Resolution Plan by the Adjudicating Authority. 2. M/s Brahmayya & Co., assisted by J Sagar Associates (legal counsel) will be hired as the implementing agency to assist the Steering Committee in fulfilling its responsibilities in relation to implementation of Resolution Plan. On the Effective Date. 3. Upon approval of this Resolution Plan by the Adjudicating Authority, the constitutional documents of the Corporate Debtor shall stand amended in the manner notified by the Resolution Applicant. The Corporate Debtor will undertake all steps and filings as are required by the Companies Act, 2013 to give effect to the amendment to the constitutional documents. Within 5 business days from the approval of this Resolution Plan by the Adjudicating Authority. 4. The Steering Committee shall issue a notice of termination to the existing O&M contractor in relation to the project owned by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he consortium of Resolution Applicant. KCR Enterprise LLP will infuse INR 160,00,00,000 (Rupees One Hundred and Sixty Crores Only) into the Corporate Debtor by subscribing to compulsorily convertible debentures (CCDs) to be issued by the Corporate Debtor. Such CCDs shall be issued at a face value of INR 10 / unit and shall carry a coupon of 9.5% payable out of profits of the Corporate Debtor. These CCDs shall be compulsorily convertible into Class AA Equity Shares in the ratio of 1:1 on the day following the eighth anniversary of the Effective Date. However, such CCDs can be converted earlier any time after the day following the fifth anniversary of the Effective Date at the option of the CCD holders. On the Effective Date. 8. Upon completion of Step 7, Class A and Class B equity shares of face value Rs. 10 each fully paid up, shall be cancelled, without payment of any consideration to such shareholders and there will be a consequent reduction in the subscribed, issued and paid up equity share capital of the Corporate Debtor. All and every outstanding redeemable preference share of all classes shall be extinguished and cancelled without payment of any consideration to such share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Details For Upfront Payment Amount (in INR) Residual Payment (in absolute terms) Terms for payment of Residual Payment Participation offered in Corporate Debtor through Shares (if any, mention the instrument involved with the amount and percentage) Insolvency Resolution Process Cost The unpaid CIRP cost will be paid from the Non-Financial Creditor Allocated Amount. Payment to workmen and employees The entire amount of admitted claims of workmen and employees shall be paid from the Non-Financial Creditor Allocated Amount. In case the sum of CIRP Costs and admitted claims by Workmen & Employees turn out to be more than the Non-Financial Creditor Allocated Amount, such Non-Financial Creditor Allocated Amount shall be increased by an amount such that the entire sum of CIRP Costs and admitted claims by Workmen & Employees are paid in full. (Rs. In Crores) Financial Creditor 10 625 As per details covered the table below, to be repaid in 32 instalments, within the completion of 8 years from the Effective Date and carrying an interest of 9.5% per annum, payable monthly. NA Operational Creditor and Other Creditors 5 (this is an estimate, subject to change and settlement t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. first charge on the current assets and second charge on the fixed assets of the Corporate Debtor. The Resolution Applicant shall keep the financial creditors informed, in writing, about such additional working capital borrowings as and when they exceed the working capital debt amount indicated in the Resolution Plan for that particular year. Resolution Applicant shall also try and refinance the working capital loan, including additional working capital loan if any, from external sources. Resolution Applicant shall have absolute discretion in negotiating the commercial terms in relation to such refinance. (b) No Liabilities to Related Parties: All amounts due or payable by the Corporate Debtor to the financial creditors who are related parties under section 29A of Code, whether admitted as claims or not, shall stand cancelled, waived, and remitted by the respective financial creditor, and upon approval of the resolution plan, the financial creditors who are related parties under section 29A of Code shall have no claim whatsoever against the Corporate Debtor, and any and all such claims shall stand waived. (c) Cancellation of dues: 100% of the amount not admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital loans: As and when the Resolution Applicant brings in a lender to fund the working capital debt (either upfront or as refinance), the Resolution Applicant reserves the right to open a new trust and retention account with such working capital lender and close the TRA opened with one among the existing financial creditors. g. Mandatory Contents of the Plan: The Resolution Professional has complied with all the mandatory requirements with regard to the Resolution Plan. h. Functions of the Steering Committee: During the period from the approval of the Resolution Plan by the Adjudicating Authority and the Effective Date of this Resolution Plan ("Interim Period"), the Steering Committee shall: (a) carry on the business with reasonable diligence and business prudence and in the same manner as it had been doing hitherto, and shall not undertake any additional financial commitments of any nature whatsoever, borrow any amounts or incur any other liabilities or expenditure, issue any additional guarantees, indemnities, letters of comfort or commitment either for themselves or on behalf of its respective affiliates or associates or any third party, or sell, transfer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 year thereafter, shall be renewed/extended by the relevant Governmental authorities, and the Corporate Debtor shall be permitted to continue to operate its business and assets in the manner operated prior to submission of this Resolution Plan until renewal/extension of such licenses and approvals. The relevant governmental authorities will provide a reasonable period of time after the Effective Date in order for the Resolution Applicant to assess the status of the licenses and governmental approvals required by the Corporate Debtor and to procure that the Corporate Debtor applies for the same. (c) The Collector of Stamps, Revenue Department, of any State Government and the Ministry of Corporate Affairs to exempt the Resolution Applicant and the Corporate Debtor, from the levy of stamp duty and fees applicable in relation to this Resolution Plan and its implementation, including any stamp duty applicable on the issue of shares by the Corporate Debtor. (d) The relevant State Pollution Control Boards to approve renewal of the consents to establish/ operate obtained by the Corporate Debtor under applicable provisions of the Water (Prevention and Control of Pollution) Act, 1974, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Regulations thereunder. (k) The relevant Governmental authorities to waive all past non-compliances of the Corporate Debtor in relation to any delayed filing or non-filing of relevant mandatory forms or returns or any other documents, including any undertakings or acknowledgements to be filed in relation thereto, under Companies Act, 2013, Foreign Exchange Management Act, 1999 and any other Applicable Law. (l) The Resolution Applicant shall have the right to renegotiate the terms of all agreements or terminate all agreements executed by the Corporate Debtor with any third parties, in its sole discretion, without any additional liabilities, penalties or other onerous obligations accruing to the Corporate Debtor or the Resolution Applicant. It is clarified that such third parties will not have the right to terminate their agreements with the Corporate Debtor. (m) Other than as set out herein, all the contracts executed by the Corporate Debtor which were valid and subsisting as on each of the insolvency commencement date in respect of the Corporate Debtor shall be renewed/extended. (n) On and from the Effective Date, all accounts of the Corporate Debtor shall stand regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any obligations, liabilities, or penalties to, or on, the Corporate Debtor or the Resolution Applicant, and all obligations, whether past, present or future, of, or accruing to, the Corporate Debtor or the Resolution Applicant thereunder shall stand cancelled and waived by the other parties to the power purchase agreements and all related and connected arrangements. Further, the bulk power transmission agreement with Maharashtra State Electricity Transmission Corporate Debtor shall stand terminated without any obligations, liabilities or penalties to, or on, the Corporate Debtor or the Resolution Applicant. 4. Further the following changes were made in response to the observations raised by the Committee of Creditors and its advisors prior to and during the CoC meeting on 26th July 2019. The Applicant herein filed memo dated 26.09.2019 intimating to the Adjudicating Authority, the following changes made to the Resolution Plan dated 23rd July 2019 by way of an addendum: This addendum forms an integral part of the Resolution Plan dated 23rd July 2019 submitted by the Resolution Applicant. Sl. No. Reference to the Resolution Plan dated 23rd July 2019 Original Sentence Revision/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 6 - provide an exhaustive list of the conditions precedent to effectiveness of the Resolution Plan, provided that only such conditions can be included which are mandatorily required to be fulfilled under Applicable Law for the implementation of the Resolution Plan ("Conditions Precedent"). Each Eligible Resolution Applicant is requested to include the following clause in the Resolution Plan - First paragraph; Page 14 Notwithstanding anything to the contrary contained in this Resolution Plan or any other documents including any definitive documents, the Eligible Resolution Applicant [together with the co-applicants] agrees and confirms that there are no conditions, assumptions and/or qualifications for effectiveness of the Resolution Plan by the Eligible Resolution Applicant [and co-applicants], whether before approval by Adjudicating Authority or thereafter until the Effective Date other than the following conditions precedent Revision Notwithstanding anything to the contrary contained in this Resolution Plan or any other documents including any definitive documents, the Eligible Resolution Applicant [together with the co-applicants] agrees and confirms that there are no condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Balance amount shall be kept in an escrow for a period of 24 months. As and when additional claims get admitted/crystallized, such operational creditors shall be paid in proportion to their share of the Overall Claims. 5. We have heard the Counsel for Resolution Professional and the Resolution Professional in person. This Application is filed under Section 30 (6) of Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as "CODE") for approval of the Resolution Plan submitted by Consortium of Sri City Private Limited and KCR Enterprise LLP ("Resolution Applicant"). 6. The Learned Counsel for Applicant stated that as per resolution passed in the 1st CoC Meeting, two Registered Valuers were appointed who submitted their valuation reports on April 26, 2019 and April 30, 2019 respectively as under:- Sl.No. Name of the Valuer Liquidation Value (Rs in crores) Fair Value (Rs. In crores) 01 Duff & Phelps India Private Limited 585.50 1,161.00 02 Ernst & Young Merchant Banking Services Private Limited 608.50 1,897.60 Average Valuation 597.00 1,529.30 7. The Resolution Plan submitted by Consortium of Sri City Private Limited and KCR Enterprise LLP ("Resolution A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Professional on account of non-admittance of their claims. As such the Resolution Plan proposes an escrow mechanism wherein amount proposed for operational creditors shall be deposited from which pro rata payments will be made against claims which crystallise and gets admitted within 24 months. It is also stated that after the expiry of such period, the balance amounts shall be distributed to all operational creditors in proportion to their admitted claims. 9. It is also stated by the Resolution Professional that the interests of existing shareholders were altered by the Resolution Plan as under:- Sl. No. Category of Share holder No. of shares held before CIRP No. of shares held after the CIRP Voting share (%) held before CIRP Voting share (%) held after CIRP 1 Equity 404,140,146 Nil 100% Nil 2 Preference 434,742,292 Nil Nil Nil 10. The Resolution Professional filed copy of Performance Bank Guarantee dated 06.08.2019 for Rs. 50,00,00,000/- on behalf of Consortium of Sri City Private Limited and KCR Enterprise LLP ("Resolution Applicant") valid up to 05.08.2020. The Resolution Professional filed an undertaking dated 27.07.2019 at page Nos. 148 &150 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues are owed. So, the exemptions sought in the Resolution Plan are subject to the provisions of Section 31(l) of the Code as amended wherever applicable. 16. The Resolution Applicant has to obtain necessary approval if any required with one year as per Section 31(4) of the Code. ORDER 17. Thus, Resolution Plan submitted by Resolution Applicant Consortium of Sri City Private Limited and KCR Enterprise LLP ("Resolution Applicant") along with the addendum which is approved by members of CoC having 75.91% voting share stands approved as per Section 31(l) of the Code. In other words we are satisfied with the Resolution Plan as approved by Committee of Creditors under Section 30(4) of the Code and it meets the requirement as referred to in Section 30(2) of IBC, 2016. Accordingly, the Resolution Plan stands approved and the same is binding on Corporate Debtor, its employees, Members, Creditors including the Central Government, any State Government or any Local Authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, Guarantors and Stakeholders involved in the Resolution Plan in ter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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