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TMI Blog2018 (11) TMI 1857X X X X Extracts X X X X X X X X Extracts X X X X ..... approved by the Resolution Professional and the Committee of Creditors with 80.92% voting has been found in conformity Section 30(2) of the IBC along with the regulations 38 and 39 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 has been approved as per Section 31(1) of the IBC with modifications as stated - Application disposed off. - MA 692/2018 & MA 811/2018 in CP(IB)1399(MB)/2017 - - - Dated:- 30-11-2018 - Hon ble Shri V. P. Singh, Member (Judicial) And Hon ble Shri Ravikumar Duraisamy, Member (Technical) For the appearing Parties: Ms Pooja Mahaja, Mr Mustafa Kachwala, Ms. Mahima i/b, Kachwala Misar Co., Advocates, Ms. Meghna Rajadhyaksha, Ms. Sukriti Jaiswal i/b Shardul Amarchand Mangaldas, Advocates, Mr. Kunal Mehta i/b M/s AAT Legal, Advocates, Mr. Gaurav Joshi, Sr. Counsel a/w Mr. Nishit Dhruva, Mr. Prakash Shinde, Mr. Rohan Agarwal, Mr. Darshit Dave i/b MDP Partners, Advocates. ORDER MA 692/2018 1. It is an application filed under Section 30(6) read with Section 31(1) of the Insolvency Bankruptcy Code, 2016 read with Regulation 39(4) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial creditors. 5. The Resolution Professional determined the liquidation value of the company as ₹ 305 crores. 6. Initially, the Resolution Professional received three resolution plans from three applicants namely Finquest Financial Services Limited, Formation Textile LLC and GBTL Limited. Thereafter revised resolution plans were received from Finquest Financial Services Limited and Formation Textile LLC. In the 19th CoC meeting, Finquest Financial Services Limited was declared as highest bidder. A miscellaneous application 651 of 2018 was filed by the Formation Textiles LLC before this Bench challenging the declaration of Finquest Financial Services Limited as the highest bidder. This bench vide its order dated 3.7.2018, directed, inter-alia, Formation Textiles LLC and Finquest Financial Services Limited to outbid each other in the presence of the Resolution Professional and the CoC. As a result of the outbidding, Formation Textiles LLC emerged as the highest bidder. This outbidding process led to maximization of assets of the Corporate Debtor as the money to be brought into the account of Corporate Debtor increased from ₹ 424.48 crores to ₹ 537 crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or payment as stated below: a) At page 65, clause 5, the plan provides for payment to Operational Creditors, Workmen and Employees, admitted claims of ₹ 1.59 crores within 30 days of the Effective Date from the cash balance available with the Company. b) At page 66, in clause 6, the plan provides for payment to other Operational Creditors including statutory creditors, their admitted claims of ₹ 0.634 crores within 30 days of the Effective Date from the cash balance available with the Company. (c) Management of the affairs of the CD after approval of the resolution plan At page 76, in chapter VI, the plan provides for Control of Corporate Debtor. The Resolution Applicant shall take over the management control of the Company and appoint new directors. (d) Implementation and Supervision At page 78, in chapter VII, the plan provides for Implementation and Supervision. At page 76, in chapter VI, inter alia, the plan provides for either extension of Resolution Professional s role for the purpose of monitoring and supervising the plan or appointment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plan shall contain details of resolution applicant and other connected persons as mentioned in Explanation to this Regulation At page 56, in chapter II, the plan provides for details of the Resolution Applicant and its management. 39(4) Resolution Professional shall submit the Plan to Adjudicating Authority with certification that the contents of the plan meet all the requirements of the IBC and the Regulations At page 366, exhibit V is the certificate of Resolution Professional confirming that the plan meets all mandatory requirements under S.30(2) of IBC and Regulation 38 of the CIRP Regulations. 10. As regards payment to financial creditors, the plan provides for a payment of ₹ 480 crores of which upfront payment of ₹ 175 crores will be made within 30 days of Effective date and balance amount of ₹ 305 which is termed as Balance Payment shall be paid over 6 years as per the terms laid down in the plan. 11. An upfront payment of ₹ 226 crores is to be infused in the Company by way of equity capital of ₹ 76 crores and ₹ 150 crores as Rupee denomin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd amendment in regulations, the Assenting Financial Creditors submitted that the provisions of Regulation 38(1) of the CIRP Regulations would not be applicable in the case of a Resolution Plan being approved by the Adjudicating Authority. Further, it was contended that seeking priority in payment would defeat the intent of the provisions of resolution process of a Corporate Debtor under the IBC. 15. The Counsel for the Axis Bank, a dissenting Financial Creditor, prayed that it is not pressing relief (a) of MA 811 of 2018 due to change in law. The written submissions filed by Axis Bank make reference to the case of Central Bank of India v. Resolution professional of Sirpur Paper Mills Ltd. [Supra n1], wherein it was held that: no discrimination can be made between the Financial Creditors in the Resolution plan on the ground that one has dissented and voted against the Resolution Plan or the other has supported and voted in favour of the Resolution Plan. Further that the Insolvency and Bankruptcy Board of India, by a notification dated 5th October, 2018 has deleted Regulation 38(1)(c) of the CIRP Regulations, which provided for the payment of liquidation value to dissenting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective Date. (b) Chapter VIII of the resolution plan seeking reliefs and concessions. (c) References to payment of liquidation value to dissenting financial creditors, in the Resolution Plan, including but not limited to clause 9. 20. This Bench further directs that : (a) As to rationalizing employee strength provided for in clause 2 at page 77, the same shall be done as per Industrial Disputes Act and other applicable laws in force. (b) As to SEBI/ stock exchange approvals, the same has to be in accordance with SEBI Regulations i.e. ICDR Regulations, LODR Regulations and other applicable laws. (c) As to External Commercial Borrowing is concerned, the same has to be in accordance with FEMA Regulations, RBI Regulations and other applicable laws. (d) In accordance with amended Regulation 38 of the CIRP Regulations, there shall be a clause providing priority in payment to the operational creditors over financial creditors under a resolution plan for the amount due. (e) The clauses related to payments shall be modified to give priority in payment to Axis Bank from the sale proceeds of Baramati Land. (f) The outstanding statutory dues will be governed as per t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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