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TMI Blog2022 (3) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... The liquidation value is approximately ₹ 71.28 crores however the resolution plan provides for payment of 227 crores. Out of the resolution amount, an amount of ₹ 225.14 crores is proposed to be paid upfront to the financial creditor. On the closing date the RA shall pay INR 48.14 crores to the financial creditor. The RA shall pay INR 50 Crore on 60th day from the closing date and pay 50 Crores to Financial Creditor on 90th Day, ₹ 27 Crores to the Financial Creditor 120th days from the closing date. The performance Bank guarantee submitted by the RA shall be appropriated towards this tranche of 27 Crores. Section 30(2)(c) (d) the resolution plan provides that upon approval, the RA will constitute an Interim Monitoring Agency, which shall comprise of four members out of which two members shall be appointed of RA and two members shall be appointed by the CoC - Section 30(2) (e), the RP has certified that the Resolution Plan complied with the provision of the Code and regulation and does not contravene any provision of law from the time being in force. In COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The applicant re-constituted the Committee of Creditors as per Section 17(1) of the CIRP Regulation on 21.01.2021 on the basis of additional claim received from another financial creditor. The revised list of CoC are as follows- (a) State Bank of India (b) IDBI Bank (c) ICICI Bank (d) Oriental Bank of Commerce (e) Dena Bank (f) Bank of Maharashtra (g) Indian Overseas Bank (h) Central Bank of India (i) Andhra Bank (j) Bank of Baroda (k) Canara Bank (l) UCO Bank (m) Allahabad Bank (n) Lodha Development Management Pvt. Ltd. 5. The first meeting of CoC was conducted on 14.06.2018, wherein the IRP was confirmed as RP. The applicant appointed two valuers namely (1) M/s. Adroit (2) M/s. Crest Capital Advisors on 22.06.2018 in terms of Regulation 27 of CIRP Regulation for the purpose of determining the fair value and the liquidation value of the Corporate Debtor. The valuation reports were submitted by two registered valuers on 27.09.2018 was circulated to the Member of the CoC from 29.09.2018. However, the valuation report did not include current and non-current assets, therefore, the applicant sought for revised valuation report and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant submitted the bid and paid the bid bond amount on 28.09.2018. The other two bidders were disqualified for the following reasons: - (a) M/s Anika Industries Pvt. Ltd. (Trading House) They did not have the network as required; and (b) M/s Langley (UK) jointly with M/s. Bowline Capital Partners, Netherland (Fund House) Brown Capital was in the fore-front backed by a fund house, M/s Langley. Although they were ready to bid as a consortium, appropriate papers (hard copy receipt of M/s Langley and statement of bidding as a consortium) were not produced. 13. At the 13th meeting of the CoC which is held on 05.01.2019, the resolution was further discussed, considered and evaluated, through discussion with Resolution Applicant and its advisors. At the 14th meeting of the CoC held on 22.01.2019, the legal advisors of the applicant made a presentation on the resolution plan. On 15th CoC meeting convened on 02.02.2019, the agenda of approving of the resolution plan was put for voting. The CoC voted on the resolution plan upto 05.02.2019 by 5:00 pm. The members of the CoC with 77.61% voting share rejected the resolution plan. 14. At the 16th meeting of the CoC convened ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant placed the compliant revised resolution plan before the CoC. The minutes of meeting captured the discussion of the CoC with respect to feasibility and viability of the revised resolution plan and it was concluded by the CoC that the revised resolution plan is feasible and viable. The member of the CoC consented to stop/cancel the voting which was ongoing. It was unanimously decided to cancel the voting and placed the revised resolution plan before the CoC. The CoC then decided to open the e-voting platform on 12 noon of 24.06.2021 till 12 noon of 25.06.2021. 19. The results of e-voting showed that the CoC has approved the resolution plan with 91.06% majority. The Resolution applicant has furnished a performance bank guarantee of USD 1,560,000 (approx. INR 11.5 crores). Salient features of final Resolution Plan 20. The summary of claims and amounts to be provided to the stakeholder under the resolution plan are as follows:- Sl No Category of Stakeholder Sub-Category of Stakeholder Amount Claimed Amount Admitted Amount Provided Under the Plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) Government (ii) Workmen (iii) Employees (iv) Others 94.35 133707.91 35.71 90351.26 36.00 25.00 38.15 0.00 Total (a) + (b) 133802.24 90386.97 61.00 38.15 4. Other than Operational Creditor filed Through Form F NA NA NA NA 5. CIRP Cost NA NA 100** NA 6. Statutory Liabilities NA NA 25.00 NA Total 463990.37 419639.69 22700 4.89 (1) The distribution amounts m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Revised Resolution Plan. The keys terms of the Revised Resolution Plan and the liquidation value is set out under Form H annexed hereto and attached as Annexure O . 22. Form H is as follow:- Brief background of the Resolution Applicant 23. Taguda Pte Limited is a private limited company incorporated under the laws of Singapore and he is engaged in the business of wholesale (including import and export) trade of ferrous and non-ferrous metals and precious metals through its wholly own subsidiaries. The activities of subsidiary of the Resolution application are as follows:- (a) Abbey International Pte. Limited, Singapore: primarily engaged in the activity of metal trading in the region of south east Asia. It has net worth of USD 20.68mn and revenue of USD 232.96mn; (b) Akasa International Limited, Hong Kong, focuses on metal and precious stones trading in China, Korea, Japan, Vietnam and other Asian markets. It has net worth of USD 30.66 million and revenue of USD 203.84 million; (c) AP International FZC, UAE: Operates in the middle East African market with primary business activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced accordingly. It is hereby clarified that amount deposited in the designated account of Company against Bid Bond shall be adjusted towards payment of above-mentioned amount of INR 48.14 crores. On the Closing Date* 2. The Resolution Applicant through Taguda India Private Limited (Identified Affiliate) shall pay an amount aggregating to INR 50 crores to the Financial Creditors towards assignment of Financial Debt of the Company of equal value out of the Admitted Debt to the Identified Affiliate. The Identified Affiliate is managed and controlled jointly by Radhika Zaveri and Sagar Zaveri. The Identified Affiliate is compliant with Section 29A of IBC and shall make payment directly to the Financial Creditors towards such assignment of Financial Debt. On 30th day from Closing Date* 3. The Resolution Applicant shall cause the Company to pay an amount of INR 50 crore to the Financial Creditors. On 60th day from Closing Date* 4. The Resolution Applicant shall cause the Company to pay an amount of INR 50 crore to the Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crore (after paying for all costs and expenses incurred in making cash recoveries and costs and expenses incurred for the Monitoring Committee), no amounts shall be paid to the Financial Creditors by the Company and/or the Resolution Applicant on this account. Detailed terms of New Preference Shares shall be as per Schedule XII At the end of each year for 3 years from the Closing Date* 3. Payment for CIRP Costs 1. The CIRP Costs shall be paid in full on actual basis and in priority to any other creditor of the Company upon the Resolution Plan becoming effective. 2. The Resolution Applicant shall through the Company pay an amount of INR 1.00 crore which shall be utilized for making payments of the CIRP Costs. In case the amount of INR 1.00 crore proposed to be infused by the Resolution Applicant towards payment of the CIRP Costs is less than the amount required to pay the CIRP Costs in full, then the balance amount payable towards the CIRP Costs shall be paid out of the first tranche of INR 48.14 crores to be paid by the Resolution Applicant to the Financial Creditors. 3. In case the actual payment for CIRP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rkmen dues and the statutory liabilities.) The Resolution Applicant shall infuse an amount of INR 25 lac in the Company by way of equity investment. On the losing Date* 6. Payment for statutory liabilities (statutory dues, taxes and other government dues) Subject to the provisions of Section 30(2)(b) of the IBC, the Resolution Applicant shall, in priority to Financial Creditors, through the Company pay an amount of: a) INR 25 lac; or b) the Liquidation Value owed for statutory liabilities; or c) 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, towards full and final payment of the statutory liabilities. The Resolution Applicant shall infuse an amount of INR 25 lac in the Company by way of equity investment. In case the actual payment for statutory liabilities is less than INR 25 lac, the surplus amount, i.e. surplus of INR 25 lac over payment for statutory liabilities, shall be added to upfront payment to Financial Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Resolution Applicant further in addition to the above payment proposed to pay 75% of the cash receivable made by the Resolution Applicant from the existing receivable within three years from the closing date that are excessing ₹ 75 crores. The Applicant company shall be free to be use its portions of the cash recovery made within three year from the closing date. Any recovery made after the expiry of three years shall be retained by the company. 28. Further, the Resolution applicant proposal that any balance financial debt forming part of admitted debt (unpaid debt), such unpaid debt shall be converted into non-convertible redeemable preference share (new preference shares) of the Company being zero dividend and non-cumulative in nature at their face value. The Unpaid Debt shall be converted into the New Preferences Shares as per the detailed terms set out in Schedule V simultaneously with the payment of the final tranche of INR 27 crore (which shall be payable by the Resolution Applicant on or before the 120th day from the Closing Date). Subject to the Applicable Laws, the memorandum of association and the articles of association of the Company, the New Preference Share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution Applicant is eligible to present resolution plans is not barred in terms of Section 29A of the Code. 32. The management and supervision of the implementation of the resolution plan, the resolution applicant and the CoC will constitute a monitoring agency for supervision of the implementation of the resolution plan and day to day operation and management of the company. The interim monitoring agency shall comprise of four members out of which two members shall be appointed by the resolution applicant and remaining members shall be appointed by the CoC. MANDATORY CONTENTS OF THE PLAN 33. In accordance with Section 30(2) of the IBC and Regulation 38 of the CIRP Regulations, this Resolution Plan includes the following mandatory contents: (i) Provides for payment of CIRP Costs in priority of the payment of any other debts of the Company and identifies the specific sources of funds that will be used for such payments (Section3.1 of this Resolution Plan); (ii) Providesforpaymentoftheemployee workmenduesinpriorityofthepaymentofanyotherdebts(exceptCIRPCosts)of the Company and identifies the specific sources of funds that will be used for such payments (Section3.2of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reholders on Closing Date gives them participation rights of 5% of outstanding Equity Shares of the Company on implementation of Resolution Plan. (iii) Any Encumbrance that was created over any Equity Shares of the Company by the Promoters, at any time, shall automatically be released and all liabilities and obligations of the Company in relation to such Encumbrance or other form of collateral shall stand permanently extinguished on the approval of this Resolution Plan by the Adjudicating Authority, without the requirement of any further action on part of any party and the Resolution Professional (and his representatives, advisers and agents), the Company and the Resolution Applicant shall at no point of time, directly or indirectly, have any obligation, liability or duty in relation thereto. Admitted Claims (i) Notwithstanding anything contained in this Resolution Plan, claims made by the creditors and other stakeholders of the Company and stated to be paid in accordance with Clause 3 of this Resolution Plan, shall be paid only if they are verified as valid and admitted by the Resolution Professional pursuant to the IBC and CIRP Regulations. (ii) Claims that have n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (i) above, the Resolution Applicant shall cause the Company to pay an additional amount aggregating to INR 127 crore in three instalments in the following manner: (a) On or before the 60th day from the Closing Date, an amount of INR 50 crore shall be paid by the Company to the Financial Creditors; (b) On or before the 90th day from the Closing Date, an amount of INR 50 crore shall be paid by the Company to the Financial Creditors; and (c) On or before the 120th day from the Closing Date, an amount of INR 27 crore shall be paid by the Company to the Financial Creditors. It is hereby clarified that the amount paid by the Resolution Applicant towards PBG as per the requirements of the RFRP shall be treated as part of INR 27 crore payable to the Financial Creditors on or before the 120th day from the Closing Date and on payment of the said tranche of 27 crore, Equity Shares shall be issued to the Resolution Applicant for such amount. It is clarified that in case the Company is unable to fund any of the amount as set out in this sub-Clause (ii) from its internal accruals, the Resolution Applicant shall fund such shortfall in a manner such that the Financial Creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith its business shall be made by the Resolution Professional. Binding Nature of the Resolution Plan (i) Upon the approval of this Resolution Plan by the Adjudicating Authority, it shall be binding on the Resolution Applicant, Company and its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in this Resolution Plan and/ or otherwise concerned or connected with the Company. (ii) Any breach of the terms of this Resolution Plan or default in the performance of the obligations hereunder by any of the foregoing persons shall cause irreparable damage to the Resolution Applicant and its proposal to revive the Company. Accordingly, in case of such breach or default, the Resolution Applicant shall have the right to an injunction or other equitable relief including specific performance of the terms hereof. (iii) This Resolution Plan overrides all past discussions with the CoC and the Resolution Professional and the earlier re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a manner specified by the Board in priority to the repayment payment of other debts of the corporate debtor; (b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than (i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or (iii) 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, 4. The resolution plan requires that the Resolution applicant would provide payment of CIRP cost in full and actual basis. The RA shall pay an amount of ₹ 1 crore which shall be utilized for making payment of CIRP cost, if the amount is less than the balance amount payable to CIRP cost shall be paid out of the first tranche of INR 48.14 crores to be paid by the Resolution Applicant to the Financial Creditor. 5. The liquidation value is approximately ₹ 71.28 crores however the resolution plan provides for payment of 227 crores. Out of the resolution amount, an amount of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ambit of its commercial and banking wisdom and is therefore not being interfere with. 10. In CoC of Essar Steel (Civil Appeal No. 8766-67 of 2019 decided on 15.11.2019) the Hon ble Apex Court clearly laid down that the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved. In para 42 Hon ble Court observed as under: Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of section 30(2) of the Code, insofar as the Adjudicating Authority is concerned, and section 32 read with section 61 (3) of the Code, insofar as the Appellate Tribunal is concerned, the parameters of such review having been clearly laid down in K. Sashidhar (supra). 11. In accordance with Regulation 39 of CIRP Regulation the RA has provided performance Bank guarantee of USD 1,560,000/-. ORDER 1. Therefore, subject to the observation made in this order, we hereby accord our approval to the Resolution Plan. The Resolution Plan shall form part of this order. 2. Any relief ..... X X X X Extracts X X X X X X X X Extracts X X X X
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