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TMI Blog2020 (4) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... of the provisions of the law for the time being in force. The RP has also certified that the resolution applicant Vaibhav Buildtech Private Limited has submitted affidavit pursuant to Section 30(1) of the Code confirming its eligibility under section 29A of the Code to submit the resolution plan and the contents of the said affidavit are in order - the decision taken by the financial creditors falls within the ambit of its commercial and banking wisdom and is therefore, not being interfered with. In view of the provisions of Section 30(4) of the Code, we approve the resolution plan submitted by Vaibhav Buildtech Private Limited as approved by the CoC. The resolution so approved shall be binding on the corporate debtor and 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 other stakeholders involved in the resolution plan - moratorium order passed by the Adjudicating Authority under Section 14 of the Code on 15-11-2018 shall cease to have effect - RP s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial Services Pvt Ltd having a voting share of 10.93%, Hero Fincorp Limited having a voting 17.22% and DHFLhaving a voting share of 5.52%. These creditors filed their claims which were approved by the RP, in view of the unamended Regulation 12 of the Regulations and intimation in this regard was given to this Tribunal. 4. It is submitted that the applicant as IRP also appointed two registered valuers to determine the fair value and liquidation value of the corporate debtor in accordance with Regulation 35 of the Regulations and the fair value and liquidation value as assessed on the basis of these two reports as per unamended Regulation 35 comes to ₹ 192.71 lacs and ₹ 135.09 lacs respectively. The valuation reports submitted by the appointed valuers are at Annexure-6 of the paper book. 5. It is stated that in the first meeting of the CoC held on 14-12-2018, the CoC resolved to continue with the IRP and appointed him as RP. The RP made a public announcement for invitation of resolution plan/expression of interest (EOI) in Form G as prescribed in Regulation 36 (A) of the Regulations by publishing the Form G in Financial Express on 31-1-2019. 6. In the third me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution plan was fixed at 15-4-2019. 7. The RP apprised the CoC in its 4th meeting that the eligibility criteria of all the resolution applicants is as per EOI published on 31-1-2019 and therefore invitation for submission of resolution plan has been sent to all the four prospective applicants. The last date for submission of resolution plan was extended to 31-5-2019 as verification of plant and machinery by the resolution applicants were still pending. 8. CA No. 324 of 2019 was filed by the RP under section 12(2) of the IBC, 2016 for extension of the CIRP time period by a further period of 90 days and the same was allowed vide order dated 10-5-2019. A copy of the order is at Annexure A-11 of the paper book. It is stated that on receipt of request from one of the prospective resolution applicant i.e. Vaibhav Build Tech Private Limited,along with EMD of ₹ 25.00 lakh on 30-5-2019, the last date for submission of resolution plan was extended to 15-6-2019 for verification of documents and machinery. Copy of the demand draft is attached as Annexure A-12. 9. It is submitted that the RP received one resolution plan in sealed envelope from one of the prospective resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepting the bid had taken care of all the provisions of the Code and the Regulations. It is prayed that the application may be allowed and the resolution plan as approved by the CoC in the CIRP of the corporate debtor be approved. 14. The learned counsel for the resolution professional submitted that as per revised Form H (AnnexureA-1, Diary No. 5221 dated 30-9-2019), all the provisions of the Code and the Regulations were complied with and that the approval of the resolution plan was made by 93% voting share of the financial creditors in the meeting of the CoC held on 31-7-2018 and therefore, the resolution plan submitted by M/s.Vaibhav Buildtech Private Limitedmay be approved. 15. During the course of hearing on 22-10-2019, the learned counsel for the RP was directed to file the computation in terms of amended Section 30(2) of the Code, missing Annexures 1 to 3 of the plan and the details of the reference made/amounts received by the RP during CIRP period and how these funds are kept and the details of how they are going to be utilised. 16. In compliance of the aforesaid order, the learned counsel for the RP filed compliance affidavit vide Diary No. 6464 dated 20-11-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial creditors are Non-Banking Finance Companies. The member of Advisory Board referred in the resolution plan is technical expert by the CoC. The revised affidavit as per Section 29 A is annexed as Annexure A-2 of the affidavit. 19. We have carefully considered the submissions of the learned counsel for the RP and the learned Senior Counsel for the resolution applicant and have also perused the record. 20. The corporate debtor was incorporated on 28-6-2010 and as discussed above, the CIRP proceedings were initiated by order delivered on 2-11-2018. The present application is filed for approval of the resolution plan submitted by M/s.Vaibhav Build tech Private Limited. The approval has been sought under the provisions of Section 31 (1) of the Code. 21. We may first of all state that after receipt, verification and collation of claims as discussed above, the IRP constituted the CoC as per the provisions of Section 21 of the Code. The details of the financial creditors, the distribution of voting share among them and the position of voting for the resolution plan is as under (para no. 4 of Form H - Annexure A-1, Diary No. 5221 dated 30-9-2019) Sl. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Other Unsecured Financial Creditors - - - - 5 Operational Creditors 8547.15 6766.92 35.00 0.502% Nil Government - - - - Workmen 125.72 125.72 125.72 100% Employees 6 Other Debts and Dues - - - - Total 11682.27 9902.04 1535.72 15.51% 23. The compliance of the resolution plan has been given in para No. 9 of Form H (supra) as follows:- Section of the Code/Regulation N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the resolution plan? Part II, Mandatory Provision of the Resolution Plan, Para 4.1.1 Page 261 Yes The Resolution Plan provides for implementation and monitoring committee for supervision of the resolution plan (e) contravenes any of the provisions of the law for the time being in force? Compliance certificate issued by advocate Vivek Sibal The Resolution Plan does not contravene any provision of the code. Part IV of the Resolution Plan, Para 3 Part IV of the Resolution Plan, Para 6 Part -1, Business Plan of the Resolution Applicant in Resolution Plan, Para 2 Part II, Mandatory Provision of the Resolution Plan, Para 4.1.1 Compliance certificate issued by advocate Vivek Sibal Page 264 Page 267 Page 254-259 Page 261 Yes Yes Yes Yes Section 30(4) Whether the Resolution Plan (a) is feasible and viable, according to the CoC? The Resolution Plan was circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olvency Commence date, as due to fire in the premises of corporate debtor, all the books of accounts were destroyed. The same were recovered from email data of the corporate debtor. The Forensic Auditor submitted his report on 15thJuly 2019 and same was discussed in the 6thCOC Meeting dated 18th July 2019. The application under section 43, 45, 50 and 66 filed with Adjudicating Authority on 9th August 2019 for avoidance of certain transactions. Application filed with NCLT under section 66 of IBC 2016. CA 703/2016 Yes Regulation 38 (1) Whether the Resolution Plan identifies specific sources of funds that will be used to pay the - (a) insolvency resolution process costs? The CIRP Costs shall be paid in full in terms of Section 30(2)(a) of the Code and Regulation 38(1)(m) of the CIRP Regulations. The Resolution Applicant understands from he IM that the IRP Costs presently aggregate to approximately INR 75,00,000 (Indian Rupees Seventy-Five Lakh). The CIRP Costs shall be paid out from the Upfront Commitment (b) liquidation value due t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mittee comprising 3(three) persons of which 1(one) will be RP, 1 (one) will be nominated by the Key Lenders, and 1 (one) will be a member of the Advisory Board as selected by the COC, will be constituted without any further action or omission required from the Corporate Debtor or the Resolution Applicant ( Implementation and Monitoring Committee ). After the Effective Date, and following the acquisition by the Resolution Applicants of control of the Corporate Debtor, the Resolution Applicants shall constitute the board of directors of the Corporate Debtor or the Amalgamated Company, as the case may be, and appoint key managerial personnel, which may include persons from the Advisory Board. The Corporate Debtor shall, without any obligation, and subject to acceptable performance norms, endeavor to retain existing manpower, which was engaged by the Corporate Debtor in relation to its business. Employee head count can be increased or reduced based on the operational performance and growth of the Corporate Debtor. The Implementation and Monitoring Committee, along with the Reconstituted Board, shall have the responsibility of management of the Corporate Debtor and implementation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lan. ( d ) it has provisions for approvals required and the timeline for the same? The Plan does not envisage any special approval from any agency except for the permissions already available and required in normal course of business. ( e ) the resolution applicant has the capability to implement the resolution plan? As per Resolution Plan, the Resolution Applicant has the capability to implement the Resolution Plan and resolution applicant have already made tie up with suppliers, buyers, key employees, land and building and professional agencies as Part I (Business Plan of the Resolution Applicant) Part 1, Business Plan of the Resolution Applicant Part 1, Business Plan of the Resolution Applicant Part II, Mandatory Provision of the Plan Para 6 of the Part 1, Business Plan of the Resolution Applicant Part 1 Business Plan of the Resolution Applicant Page 255 Page 254-257 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e insolvency resolution process of a corporate debtor- - (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan;] 25. It is observed that the amount payable towards the operational creditors is ₹ 0.35 crore as provided in the resolution plan. Further, the amount to be distributed between operational creditors in the event of liquidation, if distributed in order of priority in Section 53(1) of the Code would be NIL. There are 5 dissenting unsecured financial creditors i.e. EPI Money Pvt. Ltd., United Petro Finance Limited, Oxyzo Financial Services Pvt. Ltd., Bajaj Finance Limited and Equitas Small Finance Bank Ltd. and the amount provided for the dissenting unsecured financial creditors is ₹ 0.25 crore. The liquidation value payable to them under section 53(1) in the event of liquidation would be NIL. Hence, Section 30(2)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified by the Board. 30. The compliance of Section 30(2) of the Code is given in para No. 9 of Form H (supra). The same is being further examined as under: - Section 30(2)(a): The resolution plan (page 264 of the application) provides for the full payment of CIRP cost in priority to all other debts. The CIRP cost aggregate to ₹ 75,00,000/- approximately and are to be paid upfront. Section 30(2)(b): It is stated in Form H that the average liquidation value is ₹ 135.09 lacs. It is further stated that the unsecured financial creditors shall be paid an aggregate amount of ₹ 0.25 crore and the operational creditors shall be paid an amount of ₹ 0.35 crore. The liquidation value payable to the unsecured financial creditors and operational creditors is Nil. The payment is to be made from upfront infusion of funds. The resolution plan provides for upfront payment of ₹ 1.25 crore towards workmen and employees dues. The claims by Government are stated to be nil. Section 30(2)(c) (d):The resolution plan provides complete plan for management of the affairs of the corporate debtor (page 254-259 of the application). As per para 4.1.1 of the resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tents of the said affidavit are in order. The RP has submitted that the resolution plan has been approved by the CoC with 93% voting share in accordance with the provisions of the Code and CIRP Regulations made thereunder and after considering the feasibility and viability and other requirements specified by the CIRP Regulations. It has been held in para 42 of K. Sashidhar v. Indian Overseas Bank [2019] 102 taxmann.com 139/152 SCL 312 (SC) by the Hon'ble Supreme Court inter alia that no corresponding provision has been envisaged by the legislature to empower the resolution professional., the Adjudicating Authority (NCLT) or for that matter the Appellate Authority (NCLAT), to reverse the commercial decision of the CoC. It was also held that whereas, from the legislative history there is contra indication that the commercial or business decisions of the financial creditors are not open to any judicial review by the adjudicating authority or the appellate authority. In view of the above discussion, the decision taken by the financial creditors falls within the ambit of its commercial and banking wisdom and is therefore, not being interfered with. 33. The order was reserved on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rores Funds Provided by the Resolution Applicant on 31-8-2019 in lieu of Performance Bank Guarantee in account No. 32671242676 of Corporate Debtor ₹ 0.30 Crores It is thereby submitted that the requirements of performance security under Regulation 39(4) of the Regulations read with 36B(4A) of the Regulations are complied with. 36. On the basis of discussion made above and in view of the provisions of Section 30(4) of the Code, we approve the resolution plan submitted by Vaibhav Buildtech Private Limited as approved by the CoC. The resolution so approved shall be binding on the corporate debtor and 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 other stakeholders involved in the resolution plan. We may add that as discussed in para No. 15 and 16 supra, the RP has stated that the total amount recovered by corporate debtor during CIRP (after payment of CIRP cost) would be distributed amongst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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