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TMI Blog2019 (11) TMI 1698X X X X Extracts X X X X X X X X Extracts X X X X ..... r considering the merits of the case, the said Petition was admitted vide an Order dated 22.12.2017 (CP No. 1138/I&BP/NCLT/MB/2017). Mr. Anil Kohli was appointed as the Interim Resolution Professional (IRP). The said IRP was confirmed as the Resolution Professional (RP) in the first CoC meeting dated 02.02.2018. 4. In the second CoC meeting dated 21.02.2018, the Applicant apprised the CoC that a minimum eligibility criteria be fixed for potential Resolution Applicants for body corporates. The minimum net worth was to be fixed at (`)50 Crores. The Applicant published Invitation for Expression of Interest for submission of Resolution Plans for the Corporate Debtor in Times Group newspapers on 26.02.2018 on pan India Basis with the last date of submission as 09.03.2018. The publication for invitation of expression of interest was again done on 18.04.2018 in Times group Newspapers in Delhi NCR publications as some of the prospective investors sought time to submit their Resolution Plan. 5. Thereafter, the RP sought extension of CIRP period for 90 days, which was granted by this Bench vide order dated 20.06.2018. A fresh invitation for submission of resolution plans was issued on 22.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two resolution plans were finally submitted to the RP for the Corporate Debtor. One of the Resolution plan which was submitted was from Mr. Amit Gupta and other was from M/s. PCL Foods Pvt. Ltd. (PCL). Both the plans were placed before the CoC for discussion. The CoC took both the proposals on record and decided to seek opinion from their respective legal departments on the plans. 10. In the 10th CoC meeting dated 11.01.2019, the RP apprised the CoC that pursuant to the last meeting, Mr. Amit Gupta has filed a revised plan while PCL pursued their original plan. The resolution plan of PCL was considered non-compliant and Mr. Amit Gupta was advised to further cure the plan because of the two major conditions precedent. The first condition was in respect of the two land parcels and other being the removal of the attachments on assets, were impediment in the resolution plan process. 11. The RP has submitted that Mr. Amit Gupta submitted the revised plan (both technical and financial) on 14.01.2019 removing conditions precedent and agreeing to the CoC observations. Thereafter, in the 11th CoC meeting dated 28.03.2019, Mr. Amit Gupta filed a revised resolution plan on the advise of CoC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the associated company, M/s. P.D. Agroprocessors Pvt. Ltd, was indicted with a net liability of Rs. 637.35 Cr to NSEL on account of settlement. It was alleged that the money received by M/s. PD Agro was diverted to Dunar Foods Ltd (Corporate debtor). The Corporate Debtor raised huge debts which carry high interest costs, and during the period between 2011-2015, for storage of rice and paddy, which has witnessed huge volatility both in prices and in demand. This has resulted into huge operational loss and erosion of working capital of Corporate Debtor. The Huge interest cost to the financial creditors as well as operational creditors has resulted into operational losses to the Corporate Debtor. The company was classified as NPA by consortium of Banks in August 2014 i.e. FY 2014-15 after it failed to repay the interest and principal amount on the loan facilities availed. The company has been operating, though at a very low level as it faces the liquidity crunch due to working capital constraints. In compliance to regulation 38(3)(b) and (c) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2017 as amended from time to time, the Resolution Applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ldings and business affairs of the Corporate Debtor following the Corporate Insolvency Resolution Process (CIRP). Details of associates/affiliates The Resolution Applicant solely or as an entity, is not a promoter of any other firm or registered company and hence the Certificate of corporate structure of the Applicant, group companies, affiliates, parent company, and the ultimate parent as mandated in the process memorandum is not provided. The only affiliates for the Resolution Applicant is the individual proprietorship firm in his name which has been referred to as above. Authority Since the Resolution Applicant is an individual and himself presenting the resolution plan, has the entire rights to negotiate with the Committee of Creditors and swears to be bound by his action with respect to this resolution plan. Accordingly, no power of Attorney is required. Background of Resolution Applicant Mr. Amit Gupta is a Commerce Graduate and is well renowned and respected in the Rice milling and trading community for his business dealings and fair-trading practices. He runs a rice mill in the name and style of M/s. Amit Rice General Mill which has been i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E. FINANCIAL PROPOSAL The financial proposal for takeover of the Corporate Debtor is attached herewith as Annexure -E. F. OTHER INFORMATION Term of the plan and its implementation schedule The financial proposal envisages to pay an amount of Rs. 87.10 Crore as total consideration under the resolution plan; the mode and manner of which is laid* down in the Annexure - E. The Resolution Applicant commits to pay the entire payment laid down in the financial proposal within 3 Months of the approval of the resolution plan in the form submitted by the Resolution applicant. The Resolution Applicant propose that the balance amount after adjusting the EMD-I and EMD-11 is proposed to be paid as detailed in Annexure E, ort completion of which the resolution plan will come to an end. The details of payment/balance payment is proposed as under:- S. No. Term of the Plan Implementation Schedule 1. EMD-I Already paid 2. EMD-II (Within 3 days from issuance of LOI) 3. Expected date of approval of Resolution Plan by Hon'ble NCLT Resolution Applicant Cannot comment upon it 4. Handing of Operations of DFL (to be conducted under supervision of Mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution Applicant including his nominee. Upon receipt of complete payment as per terms of the Resolution plan entire shareholding of the Corporate Debtor shall vest with the Resolution Applicant i.e. the entire paid up share capital of the Corporate Debtor will stand transferred in the name of the Resolution Applicant or its nominee. Entire security including pledge of shares shall be released by the Lenders and the same will be assigned to the Resolution Applicant. On receipt of the complete payment as per the Financial Proposal, the existing lenders will do the needful to remove all the charges created on the assets of the Corporate Debtor. The Resolution Applicant may offer a part of equity to its associate firms, Individuals or Asset Reconstruction Companies or Non-Banking Financial Companies in order to raise required finances for the acquisition of Corporate Debtor. Notwithstanding S1.lch offer by the Resolution Applicant it shall not affect the resolution plan and/or its implementation. However, the Resolution Applicant undertakes that any such dilution of shareholding and transfer of assets would be in compliance with the requirements of Section 29-A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nkruptcy Code has wide powers and Section 238 of the Code providing the widest possible non obstante clause, makes is clear that the decision of the Hon'ble Adjudicating Authority under the Code shall have effect notwithstanding any provision of another law which is inconsistent. Therefore, it is expected and understood that upon the approval of the Resolution Plan by the Hon'ble Adjudicating Authority under Section 31 of the Insolvency and Bankruptcy Code, no future claims would lie against the Corporate Debtor from any other proceeding pending against the Corporate Debtor and it will only be responsible for the liability which is crystallised as on the date of the approval of resolution plan and addressed in the financial proposal. Furthermore, it is expected and understood that upon the approval of the resolution plan and after making the payment agreed to lenders the assets of the Corporate Debtor would be available for use free from any attachment or encumbrance under any other act or proceedings. Prayer to Hon'ble NCLT is made accordingly their kind approval in this regard and also waiver of any other claims against the Corporate Debtor, by whatever name c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt as mentioned above arises out of business/transaction made before acquisition of the Corporate Debtor (if arises in future also). 4. Prayer be made to Hon'ble NCLT of waiver of All contingent liability past or future till the date of acquisition. 5. Any other liability, whether known or unknown except as mentioned above shall be fully waived until the date of acquisition of the Corporate Debtor. 6. All the licenses, approvals, brand registrations of the business of Corporate Debtor shall be valid as on at the date of transfer to Resolution Applicant without any attachments. 7. Resolution Applicant shall have the right to terminate/renegotiate/modify all contracts including but not limited to lease of space in the Rice Units premises/vendors/consultants entered into by existing management of the Corporate Debtor without any liability or legal implication with the approval of all the vendors until the entire payment under the Resolution Plan is paid. 8. Prayer is made to Hon'ble NCLT for waiver of Income Tax/MAT or any other statutory liability on account of implementation of resolution plan in view of Corporate debtor is proposed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proximately Rs. 3.70 crores. However, it is categorically stated that at no point of time did the Resolution Applicant hold any stake or management control in the Corporate Debtors or its affiliates. The dealing between the Corporate Debtor and the Resolution Applicant was purely professional in the ordinary course of business. Information/declaration under Section 29-A of the Code and Rule 38 of CIRP Regulations It is hereby declared that the Resolution Applicant, do not face any disqualification specified under Section 29-A of the Insolvency and Bankruptcy Code, 2016 and Rule 38 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Specifically: - The Resolution Applicant is not an undischarged solvent; - The accounts of the Resolution Applicant have never been declared as a Non - Performing Asset by any bank; - The Resolution Applicant has never been a promoter or in the management control of a corporate debtor in which preferential transaction, undervalued transaction, extortionate credit transaction, or fraudulent transaction has taken place and in respect of whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds to be allocated and their sources is discussed in the table below: S. No. Payment Amount ((`) in Crores) Remarks 1. EMD-I 5.00 Already paid 2. EMD-II 5.00 Already paid 3. Balance Payment to Financial Creditors 77.00 EoI from HDFC Bank Ltd. Within 90 days from the approval of resolution plan 4. Payment to Operational Creditors 0.10 Available in Bank Account of the Resolution Applicant Additional Funding to revive the Corporate Debtor 5. Working Capital Requirement 10.00 From existing bankers as secured loans against the charge on the assets of the Corporate Debtor duly backed by the personal guarantee of the Resolution Applicant and his family members. Total 97.10 b) The Financial Creditors will be given a uniform of 8.73% of the admitted claim amount, cumulatively amounting to (`)85.40 Crore. The Operational Creditors will be given a uniform of 0.32% of the admitted claim amount, cumulatively amounting to (`)0.10 crore. An overview of the payments to Financial and Operational Creditors is given below: FINANCIAL CREDITORS ADMITTED CLAIM ((`)) AMOUNT PROVIDED UNDER PLAN ((`)) State Bank of India 783,19,47,562 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... One of the justifications for approval of this resolution plan is that the amount proposed under the plan is higher than liquidation value of the Corporate Debtor. FINDINGS 20. On hearing the submissions made by the Ld. Counsel for the Resolution Professional, the Resolution Plan in hand satisfies the minimum threshold of approval by 66% majority of the CoC. Hence, as per the CoC, the plan stands the requirement of being viable and feasible for revival of the Corporate Debtor. By and large, all the compliances have been done by the RP and the Resolution Applicant for making the plan effective after approval by this Bench. 21. As far as the question of waiver of outstanding statutory dues and other claims as on the date of approval of the Resolution Plan is concerned, the Resolution Applicant, who will step into the shoes of Corporate Debtor subsequent to approval of Resolution Plan by the Bench, shall not be held responsible for any outstanding statutory dues and other claims for the period before commencement of CIRP. 22. The Resolution Plan is binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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