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TMI Blog2019 (6) TMI 1639X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Sanjay Gupta ( RP ) has submitted the progress reports from time to time and the meetings of the CoC were held as prescribed under the Code. The present resolution professional was appointed in the 1st meeting of the CoC held on 15.05.2018 and the appointment was confirmed by the Tribunal. The RP prepared the Information Memorandum and published the Expression of Interest. In the 12th CoC meeting held on 26.12.2018 the resolution plan submitted by the resolution applicant Jyoti Strips Ltd. ( RA ) was approved by the CoC with 100% votes in favour of the resolution plan. 3. The CD is involved in the manufacturing of steel and steel products. The probable reason for insolvency of the CD was that during the period 2008 to 2012 the CD went for strategic expansion and the installed capacity increased from 75,000 MTPA (FY 2008-09) to 2,50,000 MTPA (FY 2012-13) and ventured into production of home furnishing products for the export market but the CD was unable to recover the receivables which led to defaults with the lenders. 4. According to the resolution plan, the RA is an ISO 9001:2015 company, incorporated in 2007, engaged in trading, cutting and slitting of flat steel produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operational creditors will be paid before the Closing Date. iv. Fourth, payment to financial creditors of ₹ 108 crores pro rata to their respective portion of the financial claims, will be made on the Closing Date. For each financial creditor, its respective portion of the Upfront Payment shall be allocated in the following manner: (i) first, towards repayment of all outstanding interest till the Closing Date, whether or not actually accrued; and (ii) second, towards the outstanding principal. Further payment of novation amount of ₹ 1 crore to the financial creditors on pro rata basis will also be made and payment of share acquisition consideration of ₹ 100/- only will be paid. v. Fifth, for starting and further improving the operation of the CD, ₹ 5 crores will be infused by the RA by way of equity. 6. The RA proposes the following steps for the implementation of the resolution plan: i. Within 15 days from Effective Date, the financial creditors shall invoke the pledge created in their favour over the pledged shares. The financial creditors are required to allocate nominal amount of ₹ 100/- only as value of such pledged shares. ii. On o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any shall be held by the RA, and the RA shall acquire control over the CD. On the Closing Date, the suspended Board of Directors of the CD shall be deemed to have resigned and the Board of Directors shall be reconstituted by the RA. The reconstituted board shall take control of the CD. 8. The mandatory requirements that the resolution plan has to comply with under the Code and CIRP Regulations and the treatment of such compliances in the plan submitted are as follows: Condition Compliance under Resolution Plan S. 30(1) - resolution applicant submits affidavit stating that he is eligible under Section 29A The RA has submitted an affidavit stating it is not disqualified under the provisions of Section 29A. S. 30(2)(a) - provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor. Payment of CIRP costs have been provided for as stated in para 5(i) above. S.30(2)(b) - provides for the payment of the debts of operational creditors in such manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Act, 1961 be applied to the CD similarly as it was applied to companies rehabilitated under the Sick Industrial Companies (Special Provisions) Act, 1985 where the such company was not subjected to minimum alternate tax until the net worth becomes positive. The RA prays that the Central Board of Direct Taxes ( CBDT ) shall (i) exempt income/gains/profits, if any, arising as a result of giving effect to the plan from being subjected to minimum alternate tax in the hands of Company under the provisions of the Income Tax Act, 1961, (ii) grant an exemption to receive all income without deduction of any tax under the provisions of Chapter XVII-B of the Income Tax Act, 1961 for a period of 10 years from the Closing Date and (iii) waive all liabilities in respect of taxes arising in respect of periods up to the Closing Date, including such liabilities for period up to the Closing Date that may crystallize subsequent to the Closing Date. Section 115JB of the Income Tax Act, 1961 already provides relief to companies against whom an application for CIRP has been admitted under the Code by allowing the deduction of unabsorbed depreciation and loss brought forward from the book pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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