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TMI Blog2022 (11) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... ation or liability to any Person or Stakeholder apart from payment of Final Consideration - On the date of approval by the Adjudicating Authority, all such claims which are not a part of statement of claims, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim which is not a part of the statement of claims. The cancellation and extinguishment of existing share capital of the Corporate Debtor, issuance and allotment of shares to the Acquirers and filing intimation to the Stock Exchange and other Government Authorities are allowed - the application deserves to be allowed. Application allowed. - IA No. 1585/MB/2022 In CP (IB) No. 490/MB/2018 - - - Dated:- 11-11-2022 - Hon ble Member (Judicial) : Justice P. N. Deshmukh (Retd.) And Hon ble Member (Technical) : Mr. Shyam Babu Gautam For the Applicant : Mr. Ravi Kadam Sr. Adv a/w Doctor Mustafa Sr. Adv a/w Zal T. Adhyarujina, Sr Adv a/w Shreeyash Uday Lalit, Mr. Vishesh Srivastav, Mr. Nikhil Waje, Mr. Prem Gada, Mr. Hardeep Sachdeva, Mr. Kamal Shankar, Mr. Ravi Bhasin, Mr. Parag Maini, Mr. Raghav Chadha, Ms. Gursimran Kohli, Ms. Kanika Singhal, Advocates. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.1 The Corporate Insolvency Resolution Process (CIRP) was initiated vide Order dated 11.06.2018 by this Tribunal. During the CIRP Shri Sundaresh Bhat had been appointed as the Interim Resolution Professional (IRP) and subsequently was confirmed as the Resolution Professional ( Resolution Professional ) by the Committee of Creditors of the Corporate Debtor. As No Resolution Plan was approved by the Committee of Creditors during the CIRP of the Corporate Debtor, this Tribunal vide order dated 08.05.2019, effective from 05.11.2019, ordered liquidation of the Corporate Debtor and appointed the Respondent as the Liquidator of the Corporate Debtor. A Copy of the Admission Order dated 11.06.2018 is annexed to Application as Annexure 1. Copy of the liquidation order dated 08.05.2019 passed by the Tribunal is annexed to Application as Annexure 2. 6.2 Subsequently, the Respondent issued the Public Notice in terms of Regulation 12 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 (Liquidation Regulations) and the Process Document for calling the stakeholders to submit their claims with proof for acquisition of the Corporate Debtor as a whol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Acquisition Plan submitted by the Applicant to the Respondent is annexed to this Application as Annexure 5. 6.8 It is submitted that in accordance with the regulatory requirements for foreign investment by a non-resident in an entity engaged in pharmaceutical sector herein and undertaking a brownfield project i.e. the Corporate Debtor, the Applicant will directly acquire 73.9% (Seventy Three point Nine percent) of the share capital of the Corporate Debtor and the balance will be acquired by Perrya, LLC, having its registered office at 1209 Orange Street, City of Wilmington, Delaware 19801, which has been incorporated by some of the founders of the Appellant who are non-resident Indians/ overseas citizens of India (Perrya). Perrya will acquire the shares of the Corporate Debtor on a non-repatriation basis. The Applicant and Perrya shall be collectively referred to as the Acquirers . 6.9 The Applicant further submits that the Process Document also enable the Applicant to acquire the Corporate Debtor either in its name or through special purpose vehicle (SPV) as defined in the Process Document. Further, it is submitted that the construct of SPV under the Process Docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad in the matter of Nitin Jain, Liquidator of PSL Limited vs. Lucky Holdings Private Limited, IA 391(AHM)/2021 in CP(IB) 37 of 2017 held the similar view. 6.13 Further, pursuant to the issuance of LOI, and in accordance with the Process Document, the Applicant has submitted the Acquisition Plan for acquiring the Corporate Debtor on a going concern in accordance with the Section 32A of the Code and for setting out the reliefs, concessions, exemptions in respect of the acquisition of the Corporate Debtor and for providing a clean break from the period prior to the Effective Date, as envisaged under the Acquisition Plan. In this regard, it is pertinent to mention that the Hon ble Delhi High Court in the matter of Nitin Jain, Liquidator of PSL Limited vs. Enforcement Directorate, 287(2022) DLT 625, held as follows: Undisputedly and as has been explained in the decisions of the Supreme Court noticed above, maximization of value would be clearly impacted if a resolution applicant were asked to submit an offer in the face of various imponderables or unspecified liabilities. The amendment to sub-Section (1) of Section 31 and the introduction of Section 32A undoubtedly seek to alla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such reliefs and concessions, the Acquisition Plan may become unviable and unfeasible leading to further depletion of value of the assets of the Corporate Debtor and may create hardship to numerous employees and labours. 6.16 It is submitted that this Tribunal in the matter titled Bank of Baroda vs. Topworth Pipes Tubes Private Limited CP(IB) No. 1239/MB/2018 vide Order dated 09.03.2021 granted reliefs similar to the ones prayed for by the Applicant in the present Application. This Tribunal while allowing the reliefs prayed for by the applicants therein observed as follows: 28. In the normal parlance going concern sale is transfer of assets along with the liabilities. However, as far as the going concern sale in liquidation is concerned, there is a clear difference that only assets are transferred and the liabilities of the Corporate Debtor has to be settled in accordance with Section 53 of the Code and hence the purchaser of this assets takes over the assets without any encumbrance or charge and free from the action of the Creditors. 29. This Bench feels that following are the advantages of selling the Corporate Debtor as a going concern : (a) The entity i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r extension of time to conclude the due diligence was received. Thus, the scheduled date of e-auction of the Corporate Debtor as a going concern had to be postponed from time to time. 11. Eventually, the e-auction was scheduled to happen on 01.02.2022; however, some of the other bidders had filed certain applications. This Tribunal while adjudicating one such application, directed status quo to be maintained qua the auction, vide its order dated 31.01.2022. This Order was finally vacated by this Tribunal vide its Order dated 28.03.2022 [upheld by the NCLAT vide its Final Order dated 04.042022 in Company Appeal (AT) (Ins.) No.364 of 2022 i.e. Tessenderlo Chemie International NV/SA v. Sterling Biotech Limited]. Copy of Orders passed by this Tribunal and the Hon ble NCLAT, New Delhi are annexed as Exhibit A (Colly) to Reply. 12. Pursuant to the said proceedings, the amended Process Document (Ver. 2.5) was issued on 31.3.2022, whereby the date of e-auction was scheduled for 04.04.4022. Copy of the Process Document dated 31.3.2022 issued by the Liquidator is annexed to Reply as Exhibit B. 13. As a result, the e-auction of the Corporate Debtor as a whole, on-going concern ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued to the Applicant is annexed to Reply as Exhibit F. 15. It appears that the Successful Bidder has sought for certain reliefs and concessions to enable the Successful Bidder o acquire the Corporate Debtor as a whole on a going concern basis as is where is , as is what is , as is how is and without recourse basis and without any representation, warranties or indemnities in an efficacious manner. The Liquidator understands that in light of the Successful Bidder being a company incorporated under the laws of United States of America, certain regulatory requirements for undertaking foreign investment by a non-resident in an entity engaged in pharmaceutical sector, in a brownfield project and other compliances envisaged under Foreign Exchange Management Act,1999 or any other law for time being in force relating to the acquisition of the Corporate Debtor will have to be complied with by the Applicant. The relevant stipulations appear to have been made in the Acquisition Plan, are slightly in a deviation to the technical/procedural terms provided in the Process Document. Some of the clauses of Acquisition Plan, which are in deviation, have been explained and compared with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clause 3.2.2: Acquisition Plan envisages that Successful Bidder shall have no financial obligation or liability to any person or stakeholder apart from the payment. It can be easily adduced from the Clause 4.3(VII)(iii), Clause 4.3(XI)(i), Clause 4.3(XI)(v), Clause 6(1) and Clause 13.4, that additional charges like taxes, duties etc. are liability of Successful Bidder. Clause 3.8.4: Successful Bidder would not be liable and free from all liabilities arising out of contracts entered between the Corporate Debtor and Third Party(ies) relating to the period prior to the Effective Date. The Process Document does not envisage that the Successful Bidder would be free from liabilities arising out of contracts entered between the Corporate Debtor and Third Party(ies) 4. EXTINGUISHMENT OF ALL SECURITY INTEREST OF THE CORPORATE DEBTOR Clause 3.5.1(iii): Acquisition Plan envisages that all Liabilities of the Company against the secured creditors who have not relinquished their security in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de its prayers sought multiple reliefs to facilitate the scheme of going concern sale of the Corporate Debtor. Considering the matter being for approval of going concern sale of the Corporate Debtor this bench approves the going concern sale of the Corporate Debtor. 20. We direct the Applicant to deposit the balance sale consideration into the Liquidation Account in accordance with Regulation 41 of the Liquidation Process Regulations. Upon payment of the Final Consideration, the Acquirers shall be deemed to have been granted all the rights, title and interest in the whole and every part of the Corporate Debtor, including but not limited to the assets, properties, contracts and Approvals, free and clear of all security Interest. The said sale consideration shall be distributed by the Liquidator in terms of Section 53 of the Code. Further, the Acquirers shall have no financial obligation or liability to any Person or Stakeholder apart from payment of Final Consideration. On the date of approval by the Adjudicating Authority, all such claims which are not a part of statement of claims, shall stand extinguished and no person will be entitled to initiate or continue any proceedings i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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