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TMI Blog2019 (1) TMI 1766X X X X Extracts X X X X X X X X Extracts X X X X ..... ee of Creditors - the said Resolution Plan is a fit to be approved under section 31(1) of the IBC, 2016. The Resolution Plan dated 13th December, 2019 submitted by M/s. Karatagi Refineries Private Limited (Resolution Applicant) as approved by the Committee of Creditor at 13th meeting held on 16th December, 2019 with 100%, is hereby approved by declaring that the Resolution Plan will be binding on the Corporate Applicant and its employees, members, creditors, including the Central Government, any State Government or any local Authority to whom a debt in respect of payment of dues arising under any law for the time being in force, as such as Authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the instant Resolution Plan - moratorium shall cease to have effect from the date of communication of the order. - C.P. (IB) No. 155/BB/2018, I.A. No. 12 of 2020 - - - Dated:- 13-1-2019 - Rajeswara Rao Vittanala, Judicial Member And Ashutosh Chandra, Technical Member For the Applicant : A. Murali, Ms. Jyothi Anumolu and Ravindranath Narayana Rao, RP ORDER RAJESWARA RAO VITTANALA, JUDICIAL MEMBER 1. I.A. No. 12/2020 in C.P.( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RRIC PRIVATE LIMITED 30th July 2019 2 ILC IRON STEEL PRIVATE LIMITED 30th July 2019 3 KARATAGI REFINERIES PRIVATE LIMITED 31st July 2019 (3) As per Regulation 27 of the Insolvency and Bankruptcy Board of India, Regulations, 2016 the RP shall within 7 days of his appointment, appoint two Registered Valuers to determine the fair market value and liquidation value of the Corporate Debtor in accordance with the provisions of the Code. In this regard, the Resolution Professional has appointed following Registered Valuers on June 1, 2019: i. Ravi Sankar Devarakonda - Securities and Financial Value. ii. Venkatasubbarao Kalva - Securities and Financial Value. iii. N.S. Vaidyanathan - Plant and Machinery iv. M. Muniyanndi - Plant and Machinery v. Inturi Veeraiah - Land and Building ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. In the meeting of CoC, RP explained in detail all the aspects of the plan. There were discussion on merits and demerits of the plan. TMSCCL were not inclined to 75% haircut. KGB wanted an early closure of their loan and were not inclined with 10 month period for their repayment. However Resolution Professional brought to the notice of CoC members, the limitations of accepting and not accepting the plan. The Liquidation value being less and also considering the fact that rice mill industry sector was facing huge challenges offlate and liquidation was not in the interest of any of the CoC members, who might not get even 15% of their claim, it would be appropriate to accept the plan. (8) It is further submitted that the Resolution Professional made an observation where in the Resolution Applicant had considered M/s. Mineral Embassy as a Financial Creditor and had made them a part of the CoC meeting and further scheduled a voting right to the tune of 21.04%. Further as per the plan, an amount equal to 72.5 lakh has been provided in the plan as payable. However the RP had not considered the same and the voting rights would remain the same as per the initial claims made by the Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be suitably modified by the applicant on the Settlement Date. However, the Resolution Professional shall carry on such operations till the Settlement Date. (v) Management Committee shall comprise for Resolution Professional, members chosen by the applicant, and representative of Financial Creditors to oversee implementation of the Plan. This committee shall monitor the implementation of the Plan and shall be responsible till last payout as per Schedule are made. Frequency of meetings, modes of communication, roles and responsibilities and fees for participation shall be decided by the Resolution Applicant. (vi) Management Committee shall ensure that Payment to all stakeholders is adhered at all times. (vii) On disbursement of payment to Financial Creditor, Resolution Professional shall file Report to Adjudicating Authority informing the Applicant honouring the Payment and updating status of regulatory Compliances. (d) Adequate Means for supervision of the Implementation of the Resolution Plan: i. Resolution Professional shall open new and separate bank Account of the Company from which, all payments shall be made and into which, all deposits shall be made. i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Corporate Debtor (g) The Resolution Plan Demonstrates that I. The Cause of Default is addressed II. It is feasible and Viable III. It has provisions for effective implementation IV. It has provisions for approvals required and the timeline for the same V. The Resolution Applicant has the capability to implement the Resolution Plan. (h) Future Projections Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Total revenue 13,05,18,546 14,98,06,158 15,71,87,699 17,25,27,137 18,93,81,552 Total expense 13,17,28,002 14,42,32,047 15,01,56,691 16,08,96,401 17,20,70,359 Profit Before Tax (12,09,456) 55,74,111 70,31,008 1,16,30,736 1,73,11,193 (10) Other Terms and Conditions proposed by the Resolution Applicant in the Resolution Plan were as follows: i. Payment t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cleared over a period of three years from the implementation date, with an option of a pre-closure subject to the connected litigations/appellate proceedings reaching finality and the concerned department complying with the terms of the Plan after its approval by the Adjudicating Authority. vii. Payment to equity shareholders: Considering the liquidation value of the assets of the Corporate Debtor, Plan envisages 100% sacrifice from the promoters/existing shareholders and consequently entire share capital will be reduced to NIL and the resultant amount credited to Capital Reserves Account. viii. Protection from continuation of litigation/appellate proceedings against the Corporate Debtors after the Plan is Approved by the AA i. Subject to the Adjudicating Authority granting the relief as set out in this Resolution Plan, any Encumbrance or any other form of restraints/attachments etc against the Company or any type of encumbrances created by the Promoters of the Company in connection with any Operational Debt of the Company, at any time prior to the Insolvency Commencement Date, shall automatically be waived and/released or lifted and all liabilities and obligations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nty two lakh fifty thousand only), in full and final settlement of all its claims against the corporate debtor up to the commencement date and payable as under: a. 100 % payable on or before 31-3-2022 without future Interest. b. Discharge the corporate debtor of all its obligation as well as its promoters/guarantors iv. From Central Government: (Under Regulation 37(1) (j) of CIRP Regulations) To exempt the Company from penal provisions of Income Tax Act, Companies Act, Central Excise Tax Act, Central Sales Tax, Customs Act, and any other law. v. Central Board of Direct Taxes: a. To accept the payment provided under the Plan at ₹ 1,08,03,423/- (One Crore eight lakh three thousand four hundred and twenty three only), in full and final settlement of all its claims against the corporate debtor up to the commencement date. b. To grant refund of the excess amount of ₹ 6.61 crore against the recoveries made under the attachment proceedings amounting to ₹ 7.69 crore. c. To withdraw all its balance claims over and above the settlement provided for in the Plan. d. To grant exemption/grant of relief to the company from the provisions of Sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d only), in full and final settlement of all its claims against the corporate debtor up to the commencement date. d. Top gains minerals macro commercial offshore Ltd., to accept the payment provided under the Plan at ₹ 27,87,076/-(Twenty seven lakh eighty seven thousand and seventy six only), in full and final settlement of all its claims against the corporate debtor up to the commencement date. e. Sri. A Seenam Bhat to accept the payment provided under the Plan at ₹ 3,140/- (Three thousand one hundred and forty only), in full and final settlement of all its claims against the corporate debtor up to the commencement date. f. Elite Brilliant Limited to accept the payment provided under the Plan at ₹ 25,13,970/-(Twenty five lakh thirteen thousand nine hundred and seventy only) in full and final settlement of all its claims against the corporate debtor up to the commencement date. In addition to the above, Elite Brilliant Limited shall be eligible and be at liberty to pursue its litigation to claims its rights over the cargo lying at Bevinahalli (EoU PLANT) Bellikeri Port and Krishnapatnam Port, under restraint orders from Karnataka State Forest Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther requirements as maybe specified by the Board. 6. In compliance with the said conditions, the Resolution Professional has submitted various documents and statements as per provisions of the Code and the Rules made thereunder. And these compliances are briefly stated hereunder. 7. The Resolution Professional has filed Compliance Certificate in Form-H, Under Regulation 39(4) of the IBBI (Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016: 1. The details of the CIRP are as under: Sl. No. Particulars Description 1 Name of the CD ILC Industries Ltd. 2 Date of Initiation of CIRP 16-4-2019 3 Date of appointment of IRP 16-4-2019 4 Date of Publication of Public Announcement 04-5-2019 5 Date of Constitution of CoC 22-5-2019 6 Date of First Meeting of CoC 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted an affidavit pursuant to Section 30(1) of the Code confirming its eligibility under section 29A of the Code to submit resolution plan. The contents of the said affidavit are in order. iii. The said Resolution Plan has been approved by the CoC in accordance with the provisions of the Code and the CIRP Regulations made thereunder. The Resolution Plan has been approved by 100% of voting share of Financial Creditors after considering its feasibility and viability and other requirements specified by the CIRP Regulations. iv. The voting was held in the meeting of the CoC on 16-12-2019 where all the members of the CoC were present. 4. The list of financial creditors of the Corporate Debtor being Members of the CoC and distribution of voting share among them is as under: Sl. No. Name of Creditor Voting Share (%) Voting for Resolution Plan (Voted for/Dissented/Abstained 1 Karnataka Gramin Bank 55% For 2 Tumkur Merchants Credit Cooperative Bank 45% For 5. The Reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the Resolution Plan is as under: Section of the Code Regulation No. Requirement with respect to Resolution Plan Clause of Resolution Plan Compliance (Yes/No) 25(2)(h) Whether the Resolution Applicant meets the criteria approved by die CoC having regard to the complexity and scale of operation of business of the CD? 10, 12 14 Yes Section 29A Whether the Resolution Applicant is eligible to submit resolution plan as per final list of Resolution Professional or Order, if any, of the Adjudicating Authority? Annexure Yes Section 30(1) Whether the Resolution Applicant has submitted an affidavit stating that it is eligible? Yes Section 30(2) Whether the Resolution Plan: (a) provides for the payment of insolvency resolution process costs? Yes (b) provides for the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) for the management and control of the business of the Corporate Debtor during its term? Yes (c) adequate means for supervising its implementation? Yes 38(3) Whether the resolution plan demonstrate that - (a) it addressee the cause of default? Yes (b) it is feasible and viable? Yes (c) it has provisions for its effective implementation? Yes (d) it has provisions of approvals required and the timelines for the same? Yes (e) the resolution applicant has the capability to implement the resolution plan? Yes 39(2) Whether the RP has filed application in respect of transactions observed, found or determined by him? No 8. As stated supra, the Resolution Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors, including the Central Government, any State Government or any local Authority to whom a debt in respect of payment of dues arising under any law for the time being in force, as such as Authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the instant Resolution Plan. (2) The moratorium imposed vide order dated 16-4-2019 passed in the CP shall cease to have affect from the date of communication of the order. (3) The Resolution Professional is directed to handover the management control all the assets, documents/records in physical and/or digital form on an 'as is where is' basis to the Resolution Applicant immediately, and the Resolution Professional will ceased to be resolution professional. (4) The Resolution Professional shall forward all records relating to the conduct of the CIRP and the resolution plan to the Board to be recorded on its database. (5) 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 the one year from the date of approval of the Resolution Plan by the Adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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