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TMI Blog2021 (3) TMI 556X X X X Extracts X X X X X X X X Extracts X X X X ..... he E-Auction Memorandum only have to be taken over by the Applicant. The decision to sell the Corporate Debtor as a going concern is taken by the Liquidator himself or in consultation with the Creditors / stakeholders and the proceeds from the sale of assets are going to be utilised for distribution to the Creditors in the manner specified under Section 53 of the Code. Hence all the Creditors of the Corporate Debtor get discharged and the assets are transferred free of any encumbrances. The legal entity of the Corporate Debtor however survives - In the case of sale as a going concern the Corporate Debtor will not be dissolved in terms of Section 54 of the Code. The assets with the attendant, claims, limitations, licenses, permits or business authorisations, remains in the Company. Only the ownership of the Company is acquired by the successful bidder from the Liquidator. The Applicant is permitted to bring in ₹ 40 crores as share capital and ₹ 150.90 crores as unsecured debt towards payment of sale consideration - The Applicant shall get all the rights, title and interest over whole and every part of the Corporate Debtor, including but not limited to contracts f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r assume any responsibility for any shortfall, defect or shortcoming in the moveable / immoveable assets of the Company. The Reserve Price fixed was ₹ 152 Crores. 6. Key highlights of the assets of the sale process as mentioned in the E-auction process information document at page no. 60 are extracted below- Version dated: October 13th, 2020 Corporate Debtor Topworth Pipes Tubes Pvt. Ltd. Asset Lot # Block 1 Asset Lot: Brief description: Khopoli Unit (As a going concern) Details of assets are available in the asset sale memorandums available on the Primus s website listed at (http://www.primusresolutions.in) and shall also be uploaded on the E-auction portal www.right2vote.in Auction Commencement date and time November 2nd, 2020 at 12 pm Auction closure date time November 2nd, 2020 at 3 pm Reserve Price ₹ 152 Crores Refundable Earnest Money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loaded on the Eauction portal www.right2vote.in Auction Commencement date and time November 2nd, 2020 at 12 pm Auction closure date time November 2nd, 2020 at 3 pm Reserve Price ₹ 152 Crores Refundable Earnest Money Deposit: ₹ 15.20 Crores Minimum bid increment amount: ₹ 5 Lakhs The Company proposed to be sold on a going concern basis, as per the order of the Adjudicating Authority on June, 12th 2020. Accordingly, Corporate Debtor along with the business, assets and liabilities, including all contracts, licenses, concessions, agreements, benefits, privileges, rights or interests be transferred to the acquirer. Post the transfer, the Successful Bidder shall be entitled to transfer/apply for transfer of all the licenses, approvals, concessions, and benefits as may be applicable to the unit. 9. Further Clause 10.3 of the Addendum provides as below: 10.3 The Liquidator proposes to conduct sale of the Company on a going ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties to novate the contracts executed by the Corporate Debtor, employee related agreements and contracts, etc. b. Confirmation of sale: On payment of the 100% of the bid amount, and any applicable GST/Taxes, registration fees, etc. the successful bidder shall be issued the letter for confirmation of sale. The confirmation of sale is subject to the necessary approvals and processes, if any, towards various statutory and non statutory authorities which includes but is not restricted to Securities and Exchange Board of India, Bombay Stock Exchange, National Stock Exchange, The Directorate General of Foreign Trade, Income Tax, GST Department, Factory Inspector, MPCB, etc. 10. On 11/11/2020, the Applicant submitted his bid before the Liquidator by depositing the Earnest Money Deposit (EMD) equivalent to 10% of the reserve price i.e., ₹ 15.2 Crores. 11. The Applicant participated in the E-auction process held on 11/11/2020 and submitted bid for ₹ 190.90 Crores to acquire the Corporate Debtor as a going concern . The Applicant being the H1 Bidder, Liquidator confirmed the Applicant s bid and issued letter of intent (LoI) to the Applicant on 12/11/2020. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire Sale Consideration, the Applicant (or the entities as mentioned in Paragraph 2 above, as the case may be) get all the rights, title and interest in the whole and every part of the Corporate Debtor, including but not limited to contracts, free from security interest, encumbrance, claim, counter claim or any demur, and the Sale Consideration shall be distributed by the Liquidator in terms of the Section 53 of the Code; (c) a direction be issued that on and from the Date of Acquisition, all the claims or demands made by, or liabilities or obligations owned or payable to any actual or potential creditors of the Corporate Debtor including the Government Dues (including but not limited to liabilities, interest and penalties, duties, etc. on account of income-tax, tax deduction at source, tax collection at source, goods and services tax, custom duty, value added tax, service tax, wealth-tax, cess, DGFT dues, etc.) whether direct or indirect, whether admitted or not, due or contingent, asserted or unasserted, crystallized or uncrystallized, known or unknown, secured or unsecured, disputed or undisputed in relation to any period prior to the Date of Acquisition will be written off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le law: Name of the Proposed Directors DIN Mr. Satyapal Jain 00011774 Mr. Gaurav Jain 00077770 Mr. Sampat Bhudeka 02796982 (j) a direction be issued that all subsisting consents, licenses, approvals, rights, entitlements, benefits and privileges whether under law, contract, lease or license, granted in favour of the Corporate Debtor or to which the Corporate Debtor is entitled to shall, notwithstanding any provision to the contrary in their terms and irrespective of the commencement of the insolvency/liquidation proceedings under the Code, in relation to the Corporate Debtor be deemed to continue without disruption, for the benefit of the Corporate Debtor and all additional licenses, registrations and consents required by the Corporate Debtor be made available immediately from the Date of the Acquisition; (k) a direction be issued that the Corporate Debtor shall have a right to review and terminate any contract that was entered into prior to the date of the Liquidation Order; (l) a directi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be considered to be a resolution plan under Section 79 of the Income Tax Act, 1961; (s) Other or further order or orders be passed and/or direction or directions be given as this Hon ble Tribunal may deem fit and proper. 17. The Respondent / Liquidator in his reply stated that the Prayer in Clause (a) is in consonance with the letter and spirit of the Eauction Memorandum and he has no objection to the said prayer. 18. The Respondent submits that he has filed Second Progress Report dated 10/10/2020 with the Registry of the Tribunal pursuant to the Regulation 15(1)(b) of the Liquidation Process Regulations and the same is extracted below: I say that all the secured financial creditors have relinquished their security interest in liquidation estate of the Corporate Debtor. The aforesaid position has also been recorded in the Second Progress Report dated October 10, 2020 submitted by the Liquidator to this Hon ble Tribunal pursuant to Regulation 15(1)(b) of the Liquidation Process Regulation. The relevant portion of the Second Progress Report is reproduced herein below: 11. That out of 8 secured financial creditors, Union Bank of India had not relinquished t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of CIRP, other than the restrictions put by the Code. 23. It is beneficial to refer Para Nos. 7 8 of the Round Table of Insolvency and Bankruptcy Board of India held with the stakeholders on 21/05/2018, referring to the case of Gujarat NRE Gujarat NRE NCLT KOLKATA BENCH: C.P. (IB) No. 182/KB/2017 , wherein a note was published by IBBI defining going concern as below: 7. Going Concern means all the assets, tangibles or intangibles and resources needed to continue to operate independently a business activity which may be whole or a part of the business of the corporate debtor without values being assigned to the individual asset or resource. In view of this, the following options are submitted for consideration: a. The corporate debtor may be sold as a going concern, as provided in the extant regulations. As the Company survives, there will be no need for dissolution of the Company in terms of section 54 of the Code. The assets along with all attendant claims, limitations, licenses, permits or business authorizations remain in the Company. The Company survives as it was; the ownership of the Company is transferred by the Liquidator to the acquirer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Corporate Debtor, assets, properties and rights etc. excluding the liabilities. However, in this case the assets that are included in the E-Auction Memorandum only have to be taken over by the Applicant. 26. The Corporate Debtor survives, only the ownership is transferred by the Liquidator to the purchaser. All the rights, titles and interest in the Corporate Debtor including the legal entity is transferred to the purchaser. After the sale as a going concern , the purchaser will be carrying on the business of the Corporate Debtor. 27. As far as the Liquidator is concerned, when the sale consideration is received from the bidder / purchaser, the same will be distributed to the Creditors in accordance with Section 53 of the Code. Since the amount is paid to the Creditors in terms of the Code, the liabilities of the Corporate Debtor towards the Creditors are treated as settled and the purchaser takes the assets free of any encumbrances or whatsoever. 28. In the normal parlance going concern sale is transfer of assets along with the liabilities. However, as far as the going concern sale in liquidation is concerned, there is a clear difference that only assets are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e discussions and on perusal of the pleadings and submissions made by the learned senior counsel for the Applicant the following order is passed: (a) Prayer (a) is allowed. The Applicant is permitted to bring in ₹ 40 crores as share capital and ₹ 150.90 crores as unsecured debt towards payment of sale consideration. (b) The Applicant shall get all the rights, title and interest over whole and every part of the Corporate Debtor, including but not limited to contracts free from security interest, encumbrance, claim, counter claim or any demur. The sale consideration, when received, shall be distributed by the Liquidator in terms of the Section 53 of the Code. Prayer (b) is accordingly allowed. (c) The Applicant shall not be responsible for any other claims / liabilities / obligations etc. payable by the Corporate Debtor as on this date to the Creditors or any other stakeholders including Government dues. All the liabilities of the Corporate Debtor as on date stand extinguished, as far as the Applicant is concerned. (d) Any proceedings pending against the Corporate Debtor (other than against the Erstwhile Promoters or former members of the management of the Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Corporate Debtor on making the payment of the balance sale consideration to the Liquidator by the Applicant. (n) The Liquidator is directed to provide all support and assistant to the Applicant for the smooth functioning of the Corporate Debtor to complete the acquisition. (o) The Liquidator and Applicant shall be at liberty to take all the steps required to make accounting entries for the smooth transmission and clearing the balance sheet. (p) The Liquidator is directed to ensure completion of pending filings with the Registrar of Companies, Income Tax Authorities and any other Government / Statutory Authorities. (q) The Corporate Debtor is entitled to get the benefits of brought forward losses, if any, subject to permission of the appropriate authority if so entitled under the relevant provisions of the Income Tax Act, 1961. (r) The Corporate Debtor may apply for incentives under the Package Incentive Scheme, framed by the Government of Maharashtra, subject to eligibility and other norms as provided in the said Scheme. (s) As far as the prayer for considering the bid submitted by the Applicant as Resolution Plan under Section 79 of Income Tax Act, 1961 is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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