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TMI Blog2020 (3) TMI 1461X X X X Extracts X X X X X X X X Extracts X X X X ..... f the plan will be made by making payments towards the outstanding CIRP costs, financial creditors, operational creditors, government dues and payment of other dues and towards unsecured loans/deposits and by fulfilling all other terms laid out in this resolution plan. In Part D of the Resolution Plan (Page No. 74 of application), it is mentioned that the resolution applicant has furnished a performance guarantee by way of upfront payment of Rs. 1.5 Crores. As per the requirement of performance security, a Term Deposit Advice Certificate for a sum of 1.5 crores with Kotak Mahindra Bank is found attached with the application as Annexure A-16. The RP should ensure that the performance security is received as per the decision of the CoC. The resolution plan submitted by Shri Narinder Garg, Smt. Manju Garg and Shri Shiv Garg as approved by the CoC under Section 30 (4) of the Code is hereby approved subject to comments in para No. 30 regarding performance security. The resolution plan so approved 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 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Express, an English newspaper dated 17.11.2018 and Jan Satta (Hindi) thereby inviting claims from the creditors of the Corporate Debtor as envisaged in the Code. 3. It is submitted that in pursuance of the public announcement, claims were received from the Financial Creditors and Operational Creditors including employees of the corporate debtor, which were verified and after collation, the IRP constituted the CoC as per the provisions of Section 21 of the Code. It is stated that initially the CoC was constituted with three Financial Creditors i.e. Kotak Mahindra Bank Ltd. , ICICI Bank and RBL Bank Ltd and three Operational Creditors namely Sylvan Greens Pvt. Ltd., Bhagwati Kripa Paper Mills Pvt. Ltd and Himanshu Paper Limited without voting rights. These creditors filed their claims which were approved by the RP, in view of the unamended Regulation 12 of the Regulations and intimation in this regard was given to this Tribunal. 4. It is submitted that the applicant as IRP has also appointed valuers to determine the liquidation value of the corporate debtor in accordance with Regulation 35 of the Regulations and the liquidation value as assessed on the basis of these reports as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,370.00 100.00 6. It is stated that in the 1st meeting of the CoC held on 12.12.2018, the CoC resolved to replace Mr. Somnath Gupta with the proposed RP i.e. Mr. Rajiv Khurana and appointed him as Resolution Professional (RP) by 95.70% voting right. It is further submitted that in the 2nd meeting of the CoC held on 23.01.2019, the CoC approved the Evaluation Matrix Format unanimously and Form G format was also approved. 7. It is also stated that the Expression of Interest (EOI) has been called from eligible resolution applicants on 26.01.2019 as prescribed in Regulation 36 (A) of the Regulations by publishing Form G in 'The Financial Express (English)' and Amar Ujala (Hindi). 8. It is submitted that CoC in 3th meeting was informed that after publication of Form G, no EOI have been received by the RP so far. It was also stated that one Mr. Narinder Garg, director of the suspended board of the corporate debtor, expressed his willingness to submit a resolution plan. 9. It is also submitted that the CoC in 3th meeting, resolved that a draft plan be submitted by Sh. Narinder Garg, Smt Manju Garg and Mr. Shiv Garg jointly to the RP by 10.03.2019 for scrutiny and the next CoC meetin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 13.11.2018. The present application is filed for approval of the resolution plan submitted jointly by Mr. Narinder Garg, Mrs Manju Garg & Mr. Shiv Garg (Resolution Applicant). The approval has been sought under the provisions of Section 31 (1) of the Code. 18. It is submitted that the Corporate Debtor falls within the definition of "small enterprise" under section 7 of the Micro, Small and Medium Enterprises Development Act, 2006 and by virtue by Section 240 A (1) of the Code, the present resolution applicant is eligible to file a resolution plan. C.A. No. 58/2020 was filed to place on record the Auditor's Certificate to certify the status of the corporate debtor under the MSME Act, 2006. When the matter was listed on 21.01.2020, the following order was passed:- "The Auditor Certificate filed with CA No. 58/2020 does not indicate the data and information basing on which the said certificate was issued. Hence, the Resolution Professional shall take appropriate steps to justify the said opinion. List the matter on 31.01.2020". 19. I.A. No. 18/2020 was filed to place on record the Auditor Certificate wherein it stated that the Corporate Debtor falls under the definition of "sma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,42,365 15,13,87,338 (Refer Explanation B) D Government Dues (Refer Explanation C) VAT + CST NIL 85,87,047 42,93,524 50% GST Reverse Charge 7,742 7,742 NIL TDS 1,67,957 1,67,957 NIL E Employees 38,88,016 35,38,803 11,67,820 (Refer Explanation D) NIL F Workmen No workmen in employment of CD G Other Debts/Dues 0 1,34,550 53,820 (Refer Explanation E) 60% H OTHER CREDITORS 60,30,000 60,30,000 24,12,000 (Refer Explanation F) 60% 70,49,92,134 62,24,26,834 35,63,94,250 22. The compliance of the resolution plan has been given in Para No. 9 of Revised Form H as follows:- Section of Code/Reg Requirement with respect to Resolution Plan Clause of Resolution Plan Compliance (Yes / No) 25(2)(h) Whether the Resolution Applicant meets the criteria approved by the CoC having regard to the complexity and scale of operations of business of the CD? No such criteria specified by COC Yes Section 29A Whether the Resolution Applicant is eligible to submit resolution plan as per final list of Resolution Professional or Order, if any, of the Adjudicating Authority? As per terms of the RFRP Yes Section 30(1) Whether the Resolution Applicant has submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es: (a) the term of the plan and its implementation schedule? Clause 4.3B a Refer Page 56 of Paperbook Yes (b) for the management and control of the business of the corporate debtor during its term? Clauses 4.3G Refer Page 72 of Paperbook Yes (c) adequate means for supervising its implementation? Clause 4.3H Refer Page 72 of Paperbook Yes 38(3) Whether the resolution plan demonstrates that (a) it addresses the cause of default? Yes (b) it is feasible and viable? As assessed by COC Yes (c) it has provisions for its effective implementation? Yes (d) it has provisions for approvals required and the timeline for the same? Yes (e) the resolution applicant has the capability to implement the resolution plan? Clause 4.3F Refer Page 70 of Paperbook Yes 39(2) Whether the RP has filed applications in respect of transactions observed, found or determined by him? No such application filed NA 86[Reg 39(4) Provide details of performance security received, as referred to in sub-regulation (4A) of regulation 36B.] Clause 4.3B ii Refer Page 64 of Paper book Yes 23. The approval of the resolution plan has been sought under Section 31 (1) of the Code, reading as foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor. Explanation 1.--For the removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2.--For the purposes of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor- - (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resolution plan. Further, the amount to be distributed between operational creditors in the event of liquidation would be NIL (Page 41 of Diary No. 509), if distributed in order of priority in Section 53(1) of the Code, there may not be any liquidation value available for the operational creditors since, as per regulation, operational creditors comes at No.5 in order of priority of distribution of assets under Section 53 of the Code. As discussed above, there are two dissenting financial creditors i.e. RBL Bank and IDFC First Bank Ltd. (Capital First Ltd. amalgamated with IDFC Bank Ltd.), which have been given the same treatment of payment of 100 % in the same ratio as is being paid to the other secured financial creditors. Hence, Section 30(2)(b) stands complied with. (c) Section 30(2)(c): In Clause 4.3 G of the resolution plan (page 72 of the application), it is stated that the management and control of the business of the Corporate Debtor during the term of the resolution plan will be with the Resolution Applicant. It is also stated that that there is no change in the Directorship and Shareholding of the Corporate Debtor. (d) Section 30(2)(d): In Clause 4.3 H of the Resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r considering the feasibility and viability and other requirements specified by the CIRP Regulations. 30. We shall now discuss the requirements of Regulation 39(4) of the Regulations. In Part D of the Resolution Plan (Page No. 74 of application), it is mentioned that the resolution applicant has furnished a performance guarantee by way of upfront payment of Rs. 1.5 Crores. As per the requirement of performance security, a Term Deposit Advice Certificate for a sum of ₹1.5 crores with Kotak Mahindra Bank is found attached with the application as Annexure A-16. The RP should ensure that the performance security is received as per the decision of the CoC. 31. It is also stated that no transaction has been discovered or determined in the case of the Corporate Debtor under Sections 43,45,50, and 66 of the Code and also no application has been filed under Section 66 of the Code in respect of the Corporate Debtor. 32. In view of the above discussion, the resolution plan submitted by Shri Narinder Garg, Smt. Manju Garg and Shri Shiv Garg as approved by the CoC under Section 30 (4) of the Code is hereby approved subject to comments in para No. 30 regarding performance security. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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