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TMI Blog2022 (6) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... Creditor i.e. Indu Corporation Private Limited u/s 9 of the Code for initiation of the Corporate Insolvency Resolution Process (CIRP) in respect of the Corporate Debtor, namely, M/s. Bhuwalka. Steel Industries Limited, was admitted by this Adjudicating Authority, vide order dated 08.04.2019, and the CIRP of the Corporate Debtor was initiated by appointing Mr. Shivadutt Bannanjee as the Interim Resolution Professional and he was directed to take necessary actions in accordance with relevant provisions of the Code and Regulations made thereunder. (b) Pursuant to Regulation 6 of the IBBI (IRP for Corporate Persons) Regulations, 2016, the IRP had issued public announcement in Form-A in 'Financial Express' (English) and 'Vishwavani' (Kannada) on 18.04.2019 calling upon various creditors of the Corporate Debtor to submit their claims with proof on or before 29.04.2019. (c) During the 1st Committee of Creditors (CoC) meeting held on 06.05.2019, it was informed that the Committee is constituted with two Financial Creditors based on the claims received i.e. Canara Bank (68.72% voting share) and IDBI Bank (31.28% voting share). The other claims received from creditors were also placed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluers is Rs.91.25 Crores arid the fair market value is Rs. 131.25 Crores. Copy of the valuation report has been annexed as Annexure-8. (i) It is stated that 5th meeting of the CoC was conducted on 31.10.2019, where the Committee was re-constituted as under: Sr.No. Name of the Financial Creditor Voting Percentage 1. Canara Bank 65.69% 2. IDBI Bank 29.89% 3. SBI Global Factors Limited 4.24% 4. Indian Overseas Bank 0.18% In the said meeting, the time limit for submission of the Resolution Plan was further extended upto 06.11.2019. However, the RP informed the Committee that one Resolution Plan had been received. The Committee directed the RP to keep the same under seal and to inform the concerned Resolution Applicant that they are free to submit the revised Resolution Plan, if any, before the due date. (j) In the said meeting, the RP placed the two new EoIs received from M/s.Saligram Power & Steel Pvt. Ltd. and G.K. Ispat Pvt. Ltd. on 30.10.2019 and 29.10.2019, respectively, before the Committee for their perusal and the Committee rejected these Eols on the grounds that at this stage it will be too late for the PP to check their eligibility and also for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etallix 40 Crores 4 Crores 1-3 years Starteck Finance Ltd. 60 Crores 20 Crores 1 -6 years Bipin Textile Processing Industries Limited 69.24 Crores 2 Crores 1-7 months (o) CoC in its meeting held on 21.01.2020 discussed the representations made by the respective Resolution Applicants and decided that the Resolution Plans needs to be revised and granted time till 29.01.2020 for submission of the same. CoC in its meeting held on 30.01.2020 was briefed about the revised bids and the terms of which are as follows: CoC in its meeting held on 30.01.2020 inter alia observed as under: "The Committee of Creditors preliminary observed the conditional offer made by one of the Resolution Applicants i.e. M/s. PP Mcta lux and informed the Resolution Professional to write to them requesting them to revise the plan and making it unconditional stating the amount that will be payable to the Operational Creditors. However, the Committee was of the view that the Resolution Applicants requires to further revise their Resolution Plan and hence one more round was required to be scheduled with them for further negotiations / discussions." The Committee after deliberation was o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulation 39(4) of the IBBI (IRP for Corporate Persons) Regulations, 2016 along with an affidavit is annexed as Annexure 24. Also, the Resolution Applicant i.e. Starteck Finance Ltd. has submitted an Affidavit pursuant to Section 30(1) of the Code confirming its eligibility u/ s 29A of the Code to submit the Resolution Plan and the same has been annexed as Annexure 25. (u) Summary of the Financial Proposal of Resolution Plan is as under: (v) The Resolution Applicant has sought certain reliefs and concessions as set out in the Resolution Plan (Annexure 26) by inter alia stating that all creditors of the Corporate Debtor shall withdraw all legal proceedings commenced against the Corporate Debtor in relation to claims, including all criminal proceedings, arbitral proceedings, proceedings u/ s 138 of the Negotiable Instruments Act, 1881 and proceedings under SARFAESI and RDDBFI, within 30 days of effective date. Further, immunity shall be deemed to have been granted to the Corporate Debtor from all proceedings and penalties under all applicable laws for any non-compliance for the period prior to the effective date. (w) It is stated in the Resolution Plan that the Resolution Applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor 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 the resolution plan. Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation." 9. The conditions provided for in Section 31(1) of the 1&B Code, 2016 for approval of Resolution Plan are therefore: (a) The Resolution Plan is approved by the CoC under Section 30(4) of the Code; (b) The Resolution Plan so approved meets the requirements as referred to in Section 30(2) of the Code; (c) The Resolution Plan has provisions for its effective implementation. The satisfaction of the conditions is discussed below. 10. It is submitted by the RP that, the CoC in its Meeting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r approval of the resolution plan; (d) The implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the time being in force (f) conforms to such other requirements as may be specified by the Board." 12. The compliance of Section 30(2) of the Code is given in Para No.9 of Form- H (supra). The same is being further examined as under: Section 30(2)(a): As regards the payment of insolvency resolution process costs, the Resolution Plan at Page Nos.302 and 318 of the Application inter alia stated that CIRP cost shall be paid at actuals, provided that any amounts payable in excess of Rs.25 lakh (Rupees Twenty Five Lakh) under this head shall be adjusted against the upfront amount payable to the Financial Creditors. Further, the unpaid Insolvency Resolution Process costs shall be paid in priority to payment of other debts of the Corporate Debtor. The amounts payable Section 30(2)(b): As regards the payment of debt of the Operational Creditors, the Resolution Plan at Page Nos.305 and 318 of the Application inter alia stated that the Information Memorandum provides that the total admitted claims of the Trade Creditors amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es towards fresh funds infusion to be made by the Resolution Applicant to meet working capital / property development expenses I capital requirements of the Corporate Debtor. Section 30(2)(d): As regards the implementation and supervision of the Resolution Plan, it is inter alia stated in Page No.316 of the Application that during the period from the Plan Approval Date till the Effective Date, the Insolvency Professional and Monitoring Committee shall supervise implementation of the Resolution Plan; support and assist the Resolution Applicant with implementation of this Resolution Plan; provide all assistance with removal of the existing directors of the Corporate Debtor; not undertake any actions outside the ordinary course of business and ensure that the existing management, directors, company secretary and other personnel of the Corporate Debtor shall extend full cooperation and support in implementation of this Resolution Plan, including for making all relevant filings under Applicable Law. Section 30(2)(e): As regards whether the Resolution Plan contravenes any of the provisions of the law for the time being in force, it is declared in Page No.335 of the Application that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy and Bankruptcy Code, 2016 (Code), the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) and does not contravene any of the provisions of the law for the time being in force. The RP has also certified that the Resolution Applicant i.e. Starteck Finance Limited has submitted an affidavit pursuant to section 30(1) of the Code confirming its eligibility u/s 29A of the Code to submit the Resolution Plan and the contents of the said Affidavit are in order. Copy of the Affidavit of the Resolution Applicant regarding its eligibility u/ s 29A have been annexed as Annexure 25 of the Application. The RP has submitted that the Resolution Plan has been approved by the CoC with 98.97% voting share in accordance with the provisions of the Code and CIRP Regulations made thereunder and after considering its feasibility and viability and other requirements specified by the CIRP Regulations. 16. Pursuant to Regulation 38(3)(a) of the CIRP Regulations regarding whether the Resolution Plan demonstrates that it addresses the cause of default, it is inter alia stated in Section IV of the Resolution Plan (Page No.301 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution Plan will be approved by the CoC and after the CoC approves the same, the RP shall file the Resolution Plan with the Adjudicating Authority. The Adjudicating Authority shall approve the Resolution Plan in accordance with the provisions of Sec. 31(1) of the Code. 20. Pursuant to Regulation 38(3)(e) of the CIRP Regulations regarding whether the Resolution Applicant has the capability to implement the Resolution Plan, it is inter alia stated in the Resolution Plan (Page No.301 of the Application) that the major reason for the default by the Corporate Debtor was on account of primarily poor working capital management and inability to source raw material efficiently and the necessary investment towards overhauling of infrastructure had not been undertaken. Also, in terms of value chain, it is critical that any manufacturer captures as much of the value chain as possible. Unfortunately, the Corporate Debtor was not able to have hot-charging of its raw materials. Hence, they were not able to capture the additional margin from scrap/sponge to billet stage as well as all the associated cost-savings on account of hot-charging. By virtue of its financial Strength, Starteck Finance Limi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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