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TMI Blog2021 (1) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... WR), Mumbai ORDER Per : Janab Mohammed Ajmal ( Member Judicial ) This Application is filed to present before this Tribunal the process for filing an Application(s) for dissolution of IIPL USA LLC (IIPL USA), an Offshore IL FS Entity in the Applicant Group in accordance with laws of the United States of America (USA). 2. The factual backdrop that led to the present Application may briefly be stated. The Union of India (UoI) filed CP No. 3638 of 2018 against Infrastructure Leasing and Financial Services Ltd (IL FS) under Sections 241 and 242 of the Companies Act, 2013 (the Act) inter alia alleging mismanagement in the Company. 3. This Tribunal by an order dated 01/10/2018 superseded the Board of Directors of IL FS and constituted a new Board with six Directors to take over the affairs of the Company. In addition to the six Directors appointed on 01/10/2018, this Tribunal appointed three more Directors vide order dated 03/10/2018 (pursuant to which one more director was appointed) and order dated 21/12/2018 (pursuant to which two more directors were appointed). The new Board was directed to furnish a roadmap for consideration of the Tribunal. This Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r its assets and in the absence of any other knowledgeable person such as the Resolution Professional , (if) such Committee of Creditors cannot be constituted, in the meantime the IL FS and its board may be allowed to proceed with the matter. 7. The Hon ble NCLAT by an order dated 04/02/2019 permitted the UoI and IL FS to engage Hon ble Justice Mr. D. K. Jain (Retd.) to supervise the operation of the Resolution Process. Vide same order the Hon ble NCLAT directed the UoI and IL FS to file an affidavit inter alia setting out the names of entities in the IL FS Group which are incorporated within the territorial jurisdiction of India (Indian IL FS Entities) and entities that are incorporated in other countries (Offshore IL FS Entities). In compliance the UoI filed an affidavit dated February 11, 2019 placing on record before the Hon ble NCLAT, the list of 169 Indian IL FS Entities and 133 Offshore IL FS Entities. Hon ble NCLAT by order dated 11/02/2019 inter alia excluded the Offshore IL FS Entities from the purview of the October 15 Order (15/10/2018) and directed that the resolution of the Offshore IL FS Entities may be taken up by the New Board under the supervisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the New Board for the resolution of IL FS and its group companies, a publicly solicited bid process for sale of IIPL s 100% stake in IIPL USA was initiated in January, 2019. Two non-binding bids were received in March, 2019 from: (i) E Smith Legacy LLC; and (ii) Fluor Enterprises (Bidders). These bids were conditional in nature and therefore, not in accordance with the asset divestment process being undertaken by the Applicant. IIPL engaged in negotiations with these bidders due to lack of a viable alternative option for resolution of IIPL USA, but, despite such efforts, even after several rounds of negotiations held by the USA FTA (investment banker), IIPL was unsuccessful in obtaining a binding bid for the sale of its equity stake in IIPL USA. As no bids were submitted for purchasing IIPL s shareholding in IIPL USA, it was proposed that steps be taken for the closure of IIPL USA s business activities and proceed towards closure/completion of on-going contracts, termination of employees, sale of noncore assets, and finally, file for its dissolution. 14. The proposal to sell IIPL USA s non-core assets was approved by the New Board and Justice D. K. Jain (Retd.). The Appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld cash balance of USD 162,644 as of 31/03/2020. A sum of approx. USD 10,000 is utilized to meet the monthly expenses for IT software, payments towards service charges, ADP Tax, payroll costs and fees. IIPL USA has also deposited USD 50,000 in an escrow account with its attorneys in the USA, Gray Robinson, Advocates (Attorney), to meet costs of liquidation. Thus, including USD 500,000 of collateral refund and assuming the amount deposited with the Attorney is fully utilized towards liquidation costs, IIPL USA has a net cash balance of USD 652,763.84 as of 09/09/2020. 19. Further, IIPL USA had no known external liabilities as on 31/03/2020. Other liabilities of IIPL USA comprise of loans payables to IIPL and ITNL aggregating to USD 662,644 after considering the write back due to liquidation basis of accounting. The outstanding amount of loans including interest thereon preliquidation write back are: USD 2,000,000 towards ITNL and USD 606,213 towards IIPL. 20. The accounts of IIPL USA have been audited for the Financial Year 2019 and Financial Year 2020. As on 31st March, 2020, the Assets and Liabilities of IIPL USA as per the audited accounts are as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, with the culmination of the dissolution process of IIPL USA, the resolution of IIPL USA would be complete. 23. The Board of Directors of IIPL USA on 18/04/2020 inter alia have approved the initiation of the dissolution process in accordance with the prevalent laws of USA. The Board of Directors of IIPL on 21/04/2020 inter alia gave its consent to proceed for closure of business of IIPL USA and filing the Application(s) with the concerned authorities in USA. The ITNL Board and the New Board have on 21/04/2020 and 22/04/2020 respectively approved the filing of the requisite Application(s) in relation to the closure of IIPL USA. Further, by a letter dated 14/09/2020 Justice D. K. Jain (Retd.) has accorded his approval for the proposed closure of IIPL USA in accordance with the laws of USA, subject to presentation of such proposal before this Tribunal. 24. Thus, under these circumstances and pursuant to orders dated 11/02/2019 12/03/2020 of Hon ble NCLAT, the Applicant is now before us, seeking following reliefs: A. take on record the proposal for filing application(s) for initiating process of the dissolution of IIPL USA LLC in accordance with laws of the United States o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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