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TMI Blog2021 (1) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... The Resolution Plan also provides for the appointment of a Monitoring Professional, to oversee the implementation of the Resolution Plan. The Resolution Plan is approved by the CoC with 100% in accordance with law. No prejudice would be caused to any party, if the same is approved. The said Resolution Plan is fit to be approved under section 31 (1) of the Code. The Resolution Plan dated 26th February, 2020 submitted by M/s. Shri Sai Priya Sugars Limited as approved by the Committee of Creditors at their 5th meeting held on 28th February, 2020 with 100% voting is hereby approved by declaring that the Resolution Plan will be binding on the Corporate Debtor (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 authorities to whom statutory dues are owed, guarantors, and other stakeholders involved in the Resolution Plan - Moratorium shall cease to have effect. - CP (IB) No.43/BB/2019, IA No. 177 of 2020 - - - Dated:- 8-7-2020 - Rajeswara Rao Vittanala, JUDICIAL MEMBER AND Ashutosh Chandra, TECHNICAL MEMB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets of registered valuers of each class of assets viz., Plant and Machinery, Land and Building and Financial Assets on 13-11-2019 and 16-11-2019. Based on the primary analysis of the books of account of the Company as provided by the Corporate Debtor, the RP is of the opinion that there are no significant transactions during the last two years in the books of account of the Company. Hence it is felt that there is no such transaction as covered u/ss. 43, 45, 49, 50 and 66 in the relevant period. Upon obtaining the confidentiality undertaking in terms of section 29(2) of the Code, the RP has shared Information Memorandum to all CoC members. Details of the Form-G, for invitation of Expression of Interest (EOI) and eligible Prospective Resolution Applicant to submit resolution plans on IBBI website and Financial Express (English newspaper) and Hosadiganta (Kannada newspaper) were published on 8-12-2019. (5) The CoC in its 3rd meeting held on 27-12-2019 decided to proceed with the CIRP and the RP has submitted the provisional list of PRAs u/s 25(2)(h) and CIRP Regulation 36A(4)(a), details/parameters of Evaluation Matrix and Request For Resolution Plan (RFRP) u/s 25(2)(h) and CIRP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration of their EOI at a belated stage infringed upon the Regulations 36A(3) and 36A(6) enshrined in CIRP Regulations, 2016. (9) Further, M/s. Bilagi Sugar Mills Limited filed an Application in IA No. 111/2020 seeking the Adjudicating Authority to have their EOI considered by the COC. The same was amended and resubmitted by the Applicant at the orders of this Adjudicating Authority. It is stated that the amended IA was served on the Advocate appearing for the RP on 28-2-2020. Thus, M/s. Bilagi Sugar Mills Limited had not served an advance copy of the amended prayers to enable the RP to place the same before the CoC on 28-2-2020 i.e., the date on which the CoC meeting was scheduled to consider the two Resolution Plans that had been received. Notwithstanding, the non-service of amended copy of the IA, the RP had asked the CoC whether the CoC was inclined to consider/pursue the EOI submitted by M/s. Bilagi Sugar Mills Limited. The CoC did not express any inclination towards considering/pursuing the belated EOI and expressed their willingness to go ahead with the available two bids. (10) Subsequently, the Tribunal vide its Order dated 29-5-2020, after considering all the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he corporate debtor under section 53; or ii. the amount that would have been paid to such creditors, if the amount to be distributed under the Resolution Plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, whichever is higher. (15) It was further explained to the COC as to how the said Resolution Plan should provide for the payment of debts of financial creditors who do not vote in favour of the Resolution Plan in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor. And especially the pre-eminent powers of the COC to decide on the final distribution of the Bid amount proposed by the Resolution Applicant. (16) Having stated that the resolution passed in the previous meeting held on 18-2-2020, would be adhered to in matters pertaining to the Distribution of Proceeds from Resolution Plan, the COC further deliberated to state that since unencumbered assets had zero value, only Encumbered Assets of the Corporate Debtor were taken into consideration in the Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Turnaround/transaction expertise of the Resolution Applicant 5 NA 0 2 cases $ 5 8. Financial strength of the RA 5 2 Good Excellent 5 Total 100 60 95 Note: $ Successfully completed takeovers of two sick entities - Sai Priya Sugars Ltd and Rathna Cements Ltd. and added to their credit as turning around sick/closed businesses. (19) It is stated that the Chairman of the COC educated the members as to the requirement of Performance Guarantee from the Resolution Applicants under sub-regulation 4A of Regulation 36B, and its forfeiture where the Resolution Applicant, after approval by the Adjudicating Authority, failed to implement and/or directly or incidentally contributed to the failure of implementation of the plan as per the stipulated terms and/or schedule. In this behest, the COC proposed a security of ₹ 20,00,000/- and passed the resolution. (20) Average val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ni: Besides what is stated herein above, Shri Murugesh R Nirani has also established a Cooperative Bank in the name of Vijaya Sourda Credit Society Ltd, which has over 46 branches in and around Mudhol. He has started MRN (Nirani) Foundation for serving the poor and indigent students, pregnant mothers, and socially backward people with various schemes for their upliftment through the Corporate Social Responsibility funds and other contributions. He has forayed into Educational arena by establishing Schools in Mudhol and Bagalkot to offer modern education to the students who are deprived of the same so far. He has been awarded by the State Central Government many times for his contributions in the field of Industry, including Bharat Udyog Ratna award, Sir M. Vishweshwarayya Ratna Award and Make in India award recently in 2017. He has been elected as Member of Legislative Assembly for the first time in 2008 from BJP in the Government of Karnataka and has served as Cabinet Minister of Medium Large Industries during 2008-2013. He is presently MLA from Bilagi Assembly constituency in Mudhol Taluk representing BJP party. (b) Shri Rachappa Virupakshappa Karehonna Mr. Rachapp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would entail additional infusion of funds to the tune of ₹ 5-10 Crore in addition to the pay-out to the creditors. The Applicant and its Promotor Group have the requisite Financial capability to infuse funds for operations as well as upgradation of technology, capacity etc. (23) Brickwork Ratings assigns BWR BB+ (Pronounced as BWR Double B Plus) for the bank facilities of ₹ 303.40 Crores of Shri Sai Priya Sugars Limited. BWR believes Shri Sai Priya Sugars Limited's business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the company shows improved operating performance and supply-demand dynamics are favourable with resultant higher sugar prices. (24) It is stated that the basis of settlement of claims of various classes of stakeholders, their order of priority such as the CIRP cost, Financial creditors etc., with details of claims and the amount of settlement offered and their respective timelines is as follows: (a) Funds Dispensation summary proposed under Resolution Plan: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to Secured financial creditors: After payment of the CIRP Costs, payment of the operational creditors and payment of the admitted workmen and employees' dues, the admitted Financial Debt of the secured Financial Creditors will be treated proportionately in the following manner: It is deemed that all the secured financial creditors would relinquish the security held by them, upon payment of full amount proposed to them under the Resolution Plan. The Resolution Applicant proposes to pay ₹ 16.50 Crores (Rupees Sixteen Crores and Fifty Lakhs only) to all Secured Financial Creditors since the Resolution Applicant's assessment of the current value of the security may not yield more than the value proposed. (e) Distribution table to the Secured Financial Creditors is as follows: Sl. No. Name of the Financial Creditor Debt amount admitted in Rs. Distribution share-% Distribution in Rs. 1 The Bagalkot District Central Co-Operative Bank Ltd. Bagalkot 57,74,80,000 28.09% 4,63,55,600 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an the Admitted Debt for Secured Financial Creditors which aggregates to approximately INR 205.55 Crore. Moreover, all the assets that are valued by the valuers are encumbered assets and legal charge has been created against those assets (Land and Building, Plant and Machinery and floating charge on book debts and stock, spares and inventory) in favour of Secured Financials Creditors. There are no unencumbered assets in the company. However, it is apparent that the Liquidation Value of the company would not be enough to cover the debt of the Secured Financial Creditors of the Company in full and the liquidation value for Operational Creditor would be NIL under the circumstances. As per the Information Memorandum provided by the Resolution Professional, a debt of ₹ 36.25 Crores is claimed and admitted by the Unsecured Financial Creditors, from the Corporate Debtor. The resolution plan proposes to pay NIL to this class of Financial Creditors. (h) Proposal for dissenting members of the COC: In terms of IBC, and under Regulation 38 of the CIRP Regulations, it is proposed to provide for the payment of debts of financial creditors, who do not vote in favour of the resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iabilities payable by Company includes, without limitation, claims under all taxes and provident fund payments. The Liquidation Value as mentioned above is not sufficient to cover debt of the Financial Creditors of the Company in full, therefore, the Liquidation Value for Statutory dues of the Company is NIL. Hence, no amount has been proposed for payment under this Resolution Plan towards payment of statutory liabilities. (l) Claims of Related Parties - Operational Creditors: Liquidation Value of the Company is ₹ 854.07 Lakhs. The Applicant has assumed that the Liquidation Value of the Company is less than the Admitted Debt for Financial Creditors which aggregates to approximately INR 241.80 Crore. Accordingly, the Liquidation Value is not enough to cover the debt of the Financial Creditors of the Company in full. All claims on Company by any related party and all liabilities of CD towards any related party, as on and for the period prior to Effective Date, shall be deemed to be owed and due as of the Insolvency Commencement Date, the liquidation value of which is NIL. (m) Payment to Shareholders: The exact shareholding of the company has not been shared. But f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The funds infused and generated during running the operation of the CD will be partly utilised as working capital and partly for settlement of dues of creditors as proposed in the Resolution Plan; c. Resolution Applicant will continue to make payment to financial creditors, as envisaged in the plan unless otherwise agreed between Resolution Applicant and financial creditor; d. In order to ensure smooth implementation of the Resolution Plan, the Resolution Applicant shall induct Professionals to manage day to day affairs of the Company, whose terms of appointment and duties would be decided by the restored Board of Directors. e. On the Effective Date, an Insolvency Professional, may be appointed as the Monitoring Professional to monitor and supervise the implementation of the Resolution Plan on such fee as will be settled between the Insolvency Professional and Resolution Applicant. The period of implementation of the plan to be monitored by the monitoring professional is for a period of 1 (One) years. The fees for monitoring and supervision shall be agreed for term of appointment as per mutual agreement, between the monitoring professional and Resolution Applicants and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total Liabilities 51.48 55.32 58.58 63.71 69.02 Total Assets 51.48 55.32 58.59 63.72 69.02 iii. Sources of Funding by the Resolution Applicant: a. Internal Resources of the Applicant. b. Borrowing from its Banks c. Any other unsecured Loans from promoters, if required. d. The Applicant will organize necessary investment in the Company in the form of equity or debts from own resources. Fresh share to the tune of Equity infusion, if any, shall be issued to the Resolution Applicant or its Associates; e. Initial INR 17 Crores (Rupees Seventeen Crore only) is intended to be infused in the form of Equity, quasi-equity or Debt or a combination there off, upfront within 30 days of Effective date. This will be utilised for payment of CIRP cost and payment to Creditors. 3. Heard Mr. M.V. Sudarshan, learned RP, and Mr. Anup Seetharam Rao, learned Counsel for the RP through Video Conference. We have carefully perused the pleadings of Party and extant provisions of the Code and the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in compliance with the said requisite conditions, the Resolution Professional has submitted various documents and statements as per provisions of the Code and the Rules made there under. These compliances are briefly mentioned out as under: (1) The Resolution Professional has filed the Compliance Certificate in Form-H dated 29-5-2020, under Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. (a) The details of CIRP are as under: Sl. No. Particulars Description 1 Name of the CD M/s Badami Sugars Limited 2 Date of Initiation of CIRP September 27, 2019 (27-09-2019) (Copy of the Order received on 9-10-2019) 3 Date of Appointment of IRP September 27, 2019 (27-09-2019) (Copy of the Order received on 9-10-2019) 4 Date of Publication of Public Announcement October 10, 2019 (10-10-2019) 5 Date of Constitution of CoC Octo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant M/s Shri Sai Priya Sugars Limited has submitted an affidavit pursuant to sec. 30(1) of the Code confirming its eligibility u/s 29A of the Code to submit a 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 February 28, 2020 where 97.67% of the members of the COC were present in person. Based on the request of the members of the COC, the RP sought vote of members of the COC by electronic voting system who opted for e-voting and absentee members and which was kept open at least for 24 hours as per the regulation 26. (d) The list of financial creditors of the Corporate Debtor, M/s Badami Sugars Limited, being members of the COC and distribution of voting share among them is as under: Sl. No. Name of Creditor Voting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the interests of all stakeholders in compliance with the Code and regulations made thereunder. (f) The amounts provided for the stakeholders under the Resolution Plan is as under: (Amount in Rs. lakh) Sl. No. Category of Stakeholder* Sub-Category of Stakeholder Amount Admitted Amount Provided under the Plan# Amount Provided to the Amount Claimed (%) (1) (2) (3) (4) (5) (6) (7) 1 Secured Financial Creditors (a) Creditors not having a right to vote under sub-section (2) of section 21 20555.07 20555.07 1650.00 8.03% (b) Other than (a) above: NA NA NA NA (i) who did not vote in favour of the resolution Plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided over time under the Resolution Plan and includes estimated value of non-cash components. It is not NPV.] (g) The interests of existing shareholders have been 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 13,10,507 NIL 100% NIL 2 Preference NA NA NA NA (h) The compliance 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 the CoC having regard to the complexity and scale of operations of business of the CD? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulation 38(1) Whether the amount due to the operational creditors under the resolution plan has been given priority in payment over financial creditors? 9.C.(i) 10.10 (no claims) NA Regulation 38(1A) Whether the resolution plan includes a statement as to how it has dealt with the interests of all stakeholders? 9.C.(iii) Yes Regulation 38(1B) (i) Whether the Resolution Applicant or any of its related parties has failed to implement or contributed to the failure of implementation of any resolution plan approved under the Code. (ii) If so, whether the Resolution Applicant has submitted the statement giving details of such non-implementation? 9.C.(iv) No Regulation 38(2) Whether the Resolution Plan provides: 9.C.(v) 14 Annexure II Yes (a) the term of the plan and its implementation schedule? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions under section 50 NA NA NA 4 Fraudulent transactions under section 66 NA NA NA (j) The committee has approved a plan providing for contribution under regulation 39B as under: a. Estimated liquidation cost : b. Estimated liquid assets available : c. Contributions required to be made : d. Financial creditor wise contribution is as under Sl. No. Name of financial creditor Amount to be contributed (Rs.) 1 NA NA Total NA NA (k) The Committee has recommended under Regulation 39C as under: a. Sale of corporate debtor as a going concern: es/No b. Sale of business of corporate debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment 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 authorities to whom statutory dues are owed, guarantors, and other stakeholders involved in the Resolution Plan. (2) The moratorium imposed vide Order dated 27-9-2019 passed in the CP shall cease to have effect from the date of communication of the order. (3) The Resolution Professional is directed to handover the management control of 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 cease 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 Adjudicating Authority under sub-section (1) or within such period as provided f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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