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TMI Blog2023 (12) TMI 1390X X X X Extracts X X X X X X X X Extracts X X X X ..... derlying Company Petition in C.P. (IB) No. 891/KB/2020 was filed by Bank of India, the Financial Creditor against McNally Bharat Engineering Company Limited, the Corporate Debtor, to initiate Corporate Insolvency Resolution Process ("CIRP"), under section 7 of the Insolvency and Bankruptcy Code 2016, which was admitted vide order dated 29 April 2022. 5. Initially, Mr. Anuj Jain was appointed as the Interim Resolution Professional (IRP). At the 1st meeting of the CoC held on 03 June 2022, the CoC proposed to appoint Mr. Ravi Sethia, the Applicant herein, as the Resolution Professional. The appointment of the Resolution Professional was confirmed by this Adjudicating Authority on 26 August 2022. ] Constitution of CoC 6. The IRP made public announcement on 07 May 2022 in Financial Express, the Telegraph (English) (Kolkata Edition) and EkDin (Bengali) (Kolkata Edition) newspapers regarding initiation of Corporate Insolvency Resolution Process and called proof of claims from the financial and operational creditors, workers and employees of the corporate debtor in the specified forms. The last date of submission of claims was 18 May 2022. 7. The CoC was constituted on 25 May 2022, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 175.31 34.53 Operational Creditors - Employees and Workmen 0.37 0.03 Other Operational Creditors 315.63 182.47 Other Creditors 473.68 1.01 Total 6,828.27 5,015.28 CIRP and compliances 11. The Applicant submits that in terms of the provisions of section 25(2)(h) of the Code read with regulation 36A(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, invitations in Form 'G' for Expressions of Interest ("EoI") from potential resolution applicants was issued on 05 July 2022 in Financial Express (English), The Telegraph (English) (All India edition) and Ek Din (Bengali (Kolkata edition) newspapers wherein the last date of receiving EoI was 10 August 2022. 12. The notice was also published on the website of the Insolvency and Bankruptcy Board of India (IBBI). 13. The Applicant submits that in response to the invitation for EoI published on 05 July 2022, twenty-three EoIs were received. The provisional list of prospective Resolution Applicants was issued on 10 August 2022 and the Final list of eligible Resolution Applicants was issued on 17 August 2022. The RP then shared the Information Memorand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Plan for the Corporate Debtor. In the 18th CoC meeting held on 17 March 2023, the CoC agreed to conduct the second Challenge Process on 21 March 2023. 20. Amit Metaliks Limited vide email stated that it does not wish to participate in the second Challenge Process and requested for the refund of their Bank Guarantee. No response was received from Rashmi Metaliks Limited. 21. In the 22nd CoC meeting held on 10 April 2023, the second Challenge Process was conducted and only two Prospective Resolution Applicants viz. Nalwa Steel and Power Limited and BTL EPC Limited participated in the Second Challenge Process. Nine rounds of bidding were conducted in the Second Challenge Process and Nalwa Steel and Power Limited was declared as the highest bidder. 22. The Revised Resolution Plans along with the Addendum were discussed in the 24th CoC meeting held on 16 May 2023, the 25th CoC Meeting held on 20 May 2023, 26th CoC Meeting held on 22 May 2023. In the 27th CoC Meeting held on 01 June 2023, the CoC requested the prospective Resolution Applicant to revise the Resolution Plan. 23. In the 28th CoC meeting held on 05 June 2023, the CoC discussed the addendum received from Nalwa Steel & P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lan must provide for payment of debts of OCs in such manner as may be specified by the Board which shall not be not less than 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; Clause 5.5.3., Clause 5.5.4. at Pages 37-39 of the Resolution Plan amended by the Addendum dated 16.05.2023 at Sl No. 8 at Pages 4-5. (iii) provides for 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. Clause 5.5.2.1 at Page 30 of the Resolution Plan. (c) Management of the affairs of the Corporate Debtor after approval of the Resolution Plan. Section 4.3 at Page 25, Schedule 2 at Pages 6869 of the Resolution Plan and amended by Addendum at Sl. No. 18 at Page 8. (d) Implementation and Supervision Clause 4.4. at Page 26 and Schedule 3 at Pages 70-74 of the Resolution Plan. (e) Plan does not contravene any of the provisions of the law for the time being in force. Clause 1.5 at Page 9, Clause 11.4 at Page 60 and Clause 14 at page 65 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Plan. (k) change in technology used by the corporate debtor; and Not proposed in the Resolution Plan. (l) obtaining necessary approvals from the Central and State Governments and other authorities. Clause 13.5 at Page 62, Schedule 5, Clause 1.6 at Page 80 of the Resolution Plan. (m) sale of one or more assets of corporate debtor to one or more successful resolution applicants submitting resolution plans for such assets; and manner of dealing with remaining assets. Not proposed in the Resolution Plan. III. Mandatory contents of Resolution Plan in terms of regulation 38 of CIRP Regulations: Ref to relevant Reg. Requirement How dealt with in the Plan 38(1a) The amount payable to the operational creditors under a resolution plan shall be given priority in payment over financial creditors. Clause 5.5.3 and Clause 5.5.4 at Pages 37-39 of the Resolution Plan, amended by the Addendum at Sl. No. 8 at Pages 4-5. 38(1b) The amount payable to the financial creditors, who have right to vote and did not vote in favour of the resolution plan, shall be paid in priority over financial creditors who voted in favour of the plan. Clause 5.5.2.1. at Page 30 of the Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Resolution Applicant, i.e., BTL EPC Limited, under the said Revised Resolution Plan is tabulated hereunder: Creditors Amount Admitted (Rs. in Crore) Amount Propose d (Rs. in Crore) % of claim admitted Payment Schedule CIRP Cost 0 To be paid out of the cash available with the Corporate Debtor --- Within 60 days of NCLT approval Secured Financial Creditors 3514.65 428.73 12.05% 61.18 crores - within 60 days Unsecured Financial Creditors 1282.59 3.46 0.15% 50 crores - within 150 days 40 crores - 240 days 251 crores - BG protection Assured buyback - 30 crores - within 2 years 60 days Operational Creditors (Statutory Dues) 217 3.50 0.71% Within 60 days of NCLT Approval Operational Creditors (Workman / Employees) 0.03 0.01 2.74% Within 60 days of NCLT Approval Operational Creditor (Others) 1.01 0.10 0.21% Within 60 days of NCLT Approval Shareholders & Other Stakeholders 0 0.21 --- Within 60 days of NCLT Approval Business Improvement (for working capital) --- 5.11 --- Within 14 months TOTAL 5,015.28 441.11 -- 27. The Resolution Plan defines "Effective Date" as "a date identified by the Resolution Applicant, for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted and released. 5. Any and all unauthorised possession/encroachments on the movable/ immovable Assets of the Corporate Debtor, irrespective of period and irrespective of any claim on adverse possession basis, to be declared vacated immediately and the Corporate Debtor's ownership and possession to be admitted and established. The Corporate Debtor should have right to recover and take possession of all such Assets and/or land not under its possession, for which, whether or not any agreements have been made. 6. The intangible Assets to which the Corporate Debtor is entitled to and/or applied for and/or whether registered or not, whether in possession or not, whether in use or not shall continue to be the Assets of the Corporate Debtor and all infringement and/or use by any third party shall become invalid. All agreements/documents where any such asset has been allowed to be used by any Related Party of the existing Promoters stands null and void. Lease Arrangements 7. Where Corporate Debtor is the lessee in respect of any land leased to it by third party, such lease shall continue and nothing herein shall have the effect of terminating the same, nor shall such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, circulars, guidelines, policies, licenses, approvals, consents or permissions; (C change of control, transfer charges, unearned increase, compensation or any other such liability whatsoever under any contract, agreement, lease, license, approval, consent, privilege or permission to which the Corporate Debtor or its subsidiaries, joint ventures or associates are entitled; (D) any leasehold rights or freehold rights to movable or immovable properties in the possession of the Corporate Debtor; (E) any contracts, agreements or commitments made by the Corporate Debtor, whether admitted or not, due or contingent, asserted or unasserted, crystallised or uncrystallised, known or unknown, secured or unsecured, disputed or undisputed, present or future, whether or not set out in the balance sheets of the Corporate Debtor or the profit and loss account statement of the Corporate Debtor, in relation to any period prior to the completion date or arising on account of the acquisition of control by the Resolution Applicant over the Corporate Debtor pursuant to this Resolution Plan shall be written off in full and shall stand permanently extinguished and the Corporate Debtor shall at no poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, non-compliance, breach or expiry of underlying terms of such contracts and agreements or requirement of prior approval upon change of control; these contracts and agreements shall be deemed to continue without disruption and without any further acts, deeds, cost, penalty, etc., for the benefit of the Corporate Debtor for their original tenure including subsequent tenures wherever the Corporate Debtor is entitled for renewals. 16. Any change in the management of the Corporate Debtor shall not affect the validity and enforceability of any agreement, lease deed, contract, etc. executed by the Corporate Debtor with various parties, authorities, companies, etc. save and except the provisions and scope of alterations/modifications/amendments as also such reliefs and concessions provided to the Resolution Applicant and the Corporate Debtor under this Resolution Plan. 17. The Resolution Applicant will, after the Effective Date, make an assessment of whether it wants to continue with or terminate the contracts / agreements entered into by the Corporate Debtor. It is clarified that in case the Resolution Applicant terminates any such old contract / agreements, no termination payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (including without limitation, any investigation, action, proceeding, prosecution, whether civil or criminal, by the Central Bureau of Investigation, the Enforcement Directorate or any other regulatory or enforcement agency), in relation to any period prior to the Effective Date or arising on account of the acquisition of control by the Resolution Applicant over the Corporate Debtor pursuant to this Resolution Plan shall stand withdrawn or dismissed and all liabilities or obligations in relation thereto, whether or not set out in the balance sheets of the Corporate Debtor or the profit and loss account statements of the Corporate Debtor, will be deemed to have been written off in full and permanently extinguished and the Corporate Debtor or the Resolution Applicant shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto notwithstanding any adverse order that may be passed in respect of the same by any authority prior to or after the Effective Date. Upon approval of this Resolution Plan by the Adjudicating Authority, all new inquiries, investigations. whether civil or criminal, notices, suits, claims, disputes, litigation, arbitration or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rar of Companies and MCA or other statutory authorities; (il) issuance of shares and instruments as provided in the Resolution Plan; and (iii) other compliances as per the governing law. The Corporate Debtor shall file the order of the Adjudicating Authority approving this Resolution Plan with the Registrar of Companies and MCA or any other regulatory authority, instead of resolution of Board or the shareholders of the Corporate Debtor that were otherwise required for actions that are affected through an order of the Adjudicating Authority approving this Resolution Plan, and that shall be sufficient compliance by the Corporate Debtor. 28. The directors of the reconstituted Board shall not be liable for any past non-compliances under the provisions of Applicable Laws committed by the erstwhile Board of Directors of the Corporate Debtor. 29. Approval of this plan shall be deemed approval for removal of Directors from the record of the Corporate Debtor as appearing on the MCA portal/ website/ income tax web site/ Any Indirect tax website. Certified copy of the order approving Resolution Plan shall be a direction on such statutory authorities to do the needful. Taxation 30. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, including but not limited to any income tax and MAT Liability arising on capital reduction in the Corporate Debtor, waiver/write off/ write down of current amounts due to employees, vendors, Operational Creditors, Financial Creditors, value of Assets, value of inventories, etc. without any impact un brought forward tax and book loss / depreciation and waive all Liabilities whether crystallised or not in respect of Taxes (including interest and penalty) arising in respect of periods up to the Appointed Date and arising out of implementation or sanction of the Resolution Plan 35. It is further clarified that a company is not ordinarily permitted to carry forward its accumulated business losses in case of a change in the shareholding of such company in excess of 51% (fifty-one percent) as per Section 79 of the Income-Tax Act, 1961. However, this restriction does not apply if such change in shareholding takes place pursuant to a resolution plan approved under the Code, provided that the jurisdictional Principal Commissioner of Income-tax or the jurisdictional Commissioner of Income-tax (as appropriate), is afforded reasonable opportunity to express his views in this regard. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the State Governments, Central Governments or any other authorities, from payment of any stamp duty on transfer of land, salami on transfer, transfer fees on account of change in shareholdings pursuant to this plan, Khazana, land taxes, conversion of land including interest, penalty or other charges/fees relating to the transfer/takeover of Assets or state levies which may arise in the event of change in management of the Corporate Debtor pursuant to the acceptance of this Resolution Plan. Further direction be issued to the state authorities for suitably amending all the licenses and rights pursuant to the change of management on acceptance of the Resolution Plan. Any subsidies or entitlements, which are accruing to the Corporate Debtor either before or after the approval of the Resolution Plan, are to be continued. Claims by Statutory Authorities 40. All statutory Liabilities pertaining to the period prior to the Effective Date or pertaining to or arising out of implementation of this Resolution Plan shall not he required to he paid and the same shall be binding on all such statutory authorities. Extension of time for completion of contracts 41. Approval of the Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r / State Government / Central Government or any implementing authority appointed under any law for the time being in force shall act in accordance with the aforesaid directions. Waiver of Valuation of Pricing of Shares by Registered Valuer 44. Approval of Resolution Plan by the Adjudicating Authority will treated as waiver of the requirements of the valuation of pricing of shares by Registered Valuer under any Act, Law, Statute, Rules, Regulations etc applicable or in vogue for computation to issue equity shares or equivalent instruments through Preferential Allotment as well as Debt Instruments to RA, Investors, KMP, Employees etc for a period of 60 Months. The request for such waiver is due to the fact that current valuation of the Corporate Debtor basis Book Value or Net Assets Value basis Realisable Valuation of Assets adjusted to Current Liabilities or Discounted Cash Flow of the Business will be "Negative", whereas the RA is paying Premium over Face Value considering the Future Potential of the Business. Removal of Corporate Debtor's name from blacklisted or barred vendor/contractors list (if any) 45. Approval of the Resolution Plan by the Adjudicating Authority wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, 72, 73, 74 of the Code), shall arise in respect of the Corporate Debtor or the Resolution Applicant or the Resolution Professional and his representatives who shall at no point of time, directly or indirectly, have any obligation, liability or duly in relation thereto. If any criminal proceedings initiated against the officers of the Corporate Debtor prior to the Effective Date cannot be disposed of by the Adjudicating Authority under Applicable Law, the same shall continue against such officers. However, any liability accruing to the Corporate Debtor or the Resolution Applicant as a result of or in relation to any criminal proceedings against the officers of the Corporate Debtor shall be deemed to have been permanently extinguished by the Adjudicating Authority order approving the Resolution Plan. Orders 29. On hearing the submissions made by the Resolution Professional, and perusing the record, we find that the Resolution Plan filed by BTL EPC Limited has been approved by the CoC with 90.06% voting share. As per the CoC, the plan meets the requirement of being viable and feasible for revival of the Corporate Debtor. By and large, all the compliances have been done by the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uirement as referred to in sub-section (2) of Section 30 is, that after the approval of the resolution plan, no surprise claims should be flung on the successful resolution applicant. The dominant purpose is, that he should start with fresh slate on the basis of the resolution plan approved. 62. This aspect has been aptly explained by this Court in the case of Committee of Creditors of Essar Steel India Limited through Authorised Signatory (supra). "107. For the same reason, the impugned NCLAT judgment [Standard Chartered Bank v. Satish Kumar Gupta, 2019 SCC OnLine NCLAT 388] in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. A successful resolution applicant cannot suddenly be faced with "undecided" claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution Plan has to be consistent with extant law. The Resolution Applicant shall make necessary applications to the concerned regulatory or statutory authorities for renewal of business permits and supply of essential services, if required, and all necessary forms along with filing fees etc. and such authority shall also consider the same keeping in mind the objectives of the Code, which is essentially the resolving of the insolvency of the Corporate Debtor and enabling the Corporate debtor to stand on its feet again. 40. In case of non-compliance of this order or withdrawal of Resolution Plan, the payments already made by the Resolution Applicant shall be liable for forfeiture. 41. Subject to the observations made in this Order, the Resolution Plan is hereby APPROVED by this Bench. The Resolution Plan shall form part of this Order and shall be read along with this order for implementation. The Resolution Plan thus approved shall be binding on the Corporate Debtor and other stakeholders involved in terms of section 31 of the Code, so that revival of the Debtor Company shall come into force with immediate effect. 42. The Moratorium imposed under section 14 of the Code shall ce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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