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TMI Blog2025 (1) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... ided under section 30(2) of the Code. Thus, it is the duty of the Adjudicating Authority to satisfy itself that the Resolution Plan, as approved by the CoC, meets the above requirements. In K Sashidhar v. Indian Overseas Bank Others [ 2019 (2) TMI 1043 - SUPREME COURT] the Hon'ble Apex Court held that if the CoC has approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan, as approved by the CoC, meets the requirements specified in Section 30(2). The Hon'ble Apex Court further observed that the role of the NCLT is 'no more and no less'. The Hon'ble Apex Court further held that the discretion of the Adjudicating Authority is circumscribed by Section 31 and is limited to scrutiny of the Resolution Plan as approved by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the Adjudicating Authority can reject the Resolution Plan is in reference to matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2021. Based on the claims received and admitted, the Applicant constituted the Committee of Creditors ('CoC') on 24th December 2021 and held the first meeting of the CoC on 30th December 2021, in which IRP was confirmed as the Resolution Professional ('RP'). The first CoC consisted of the following members: Sr. No. Name of the Creditor Percentage stake in COC 1 Dharmshil Agencies 0.69 2 IDBI Trusteeship Services Limited 94.54 3 Chandana Electronics Limited 1.22 4 M/s. Intel Land Developers PVT Ltd 2.12 5 Luharka Media and Infra Limited 0.21 6 R D Fan Limited 1.22 Total 100 4. Following the first CoC meeting, the Applicant appointed two valuers for each asset class on January 31, 2022. Due to wide variations in the initial valuations, a third valuer was appointed on May 9, 2022, and the fair and liquidation values were arrived at based on the closest average value. 5. The Applicant made a public announcement inviting Expressions of Interest (Form G) on 12th February 2022 pursuant to which 7 (seven) expressions of interest were received. The Applicant then issued a provisional list of two prospective resolution applicants on 9th March 2022 based on the eligibility cri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditors for the distribution of payment towards the secured financial creditors. 10. In the 10th Meeting of the CoC held on 25th August 2022, the CoC considered both the plans and found that although the plans were viable and feasible, the salient difference lay in the following: Amit Mahendrabhai Shah increased his bid and offered to complete payments within 45 days, with funds distribution based on each secured financial creditor's security value. However, his revised bid was still below the Corporate Debtor's liquidation value for which he gave reasoning as to a legal dispute over land ownership involving the Corporate Debtor's subsidiary. CA Patel Textiles Pvt Ltd. chose not to increase their bid due to the legal issues concerning the Corporate Debtor's land. However, they proposed to make the first payment within 30 days of plan approval, which scored them higher on the evaluation matrix. 11. The Applicant submits that the CoC, in its commercial wisdom, is permitted to accept a Resolution Plan having a lower value in comparison with the Liquidation Value of the corporate Debtor, should the resolution plan be otherwise feasible and viable. This right of the CoC t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fabric since the year 1995. However, due to the financial distress that the Corporate Debtor is presently going through, the manufacturing activities are being carried out on a job-work basis at its plant located at Piplaj, Ahmedabad. It has its Registered Office in Mumbai. 18. Brief Background of the Successful Resolution Applicant Mr. Amit Mahendrabhai Shah has over 40 years of experience in the Textiles and Construction industries. The associate entities of Mr. Shah are as follows: HR Impex: A family-owned partnership firm having an experience of more than 40 years of textile business engaged in the activity of Denim business mainly of Arvind Denim with a turnover of more than Rs.100 crores per annum Nirdeep Exports and Imports Pvt Ltd: A family-owned company engaged in the activity of construction of Residential and Commercial complexes in and around Gandhinagar and renting of immovable business Alin Leasing and Fin stock Pvt Ltd: A Company engaged in the business of construction of various industrial estates in Ahmedabad Amit Shah HUF: A HUF in the business of construction and holding land parcels valued at more than Rs.250 crores. 19. SALIENT FEATURES OF THE APPROVED RESOLUTI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) As per the Information Memorandum dated August 10, 2022, and subsequent addendums, the Resolution Professional (RP) has received claims from secured and unsecured financial creditors amounting to Rs. 123,10,02,561. Out of this, the RP has admitted claims up to Rs. 104,31,58,621. Furthermore, the SRA will inject a total of Rs. 15,86,76,148 as an upfront amount within 45 days from the approval date. (ii) As per the Resolution Plan an amount of Rs.15,71,06,680/- is to be distributed to the secured financial creditors as per the value of the security held by the secured financial creditors given in the Information Memorandum. An amount of Rs.15,69,468/- will, however, be distributed to the unsecured financial creditors. D. Treatment of Dissenting Financial Creditors (i) As per Section 30(2) of the Code, the Resolution Plan shall provide 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 liquidation of the corporate debtor. The Resolution Plan states that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal Creditors (i) As per the Information Memorandum dated August 10, 2022, and subsequent addendums, the Resolution Professional (RP) has received claims amounting to Rs. 15,81,30,819. Out of this, the RP has admitted claims up to Rs. 11,27,09,707. Furthermore, the SRA will inject a total of Rs. 13,29,975 as an upfront amount within 45 days from the approval date. (ii) The amount payable to the operational creditors under the Resolution Plan is not less than the amount required to be paid under Section 30(2) (b) of the Code, and shall be paid in priority over the financial creditors as per Regulation 38(1) of the CIRP Regulations. H. Treatment of Other Creditors (ESIC, Provident Fund and Sonu Singh) As per the Information Memorandum dated August 10, 2022, and subsequent addendums, RP has received claims of (a) Provident Fund -21,04,435, (b) ESIC - 3,09,472 and (c) Sonu Singh - 20,74,557. RP has admitted 100% claims of all the other Creditors and will infuse a total of Rs.24,38,387 as an upfront amount within 45 days from the approval date. Furthermore, as per the Additional Affidavit dated 25.09.2024, the SRA has taken the responsibility of arranging an additional amount of Rs. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No additional approvals will be required from creditors or stakeholders for ongoing implementation. L. Eligibility of Applicants under Section 29A of the Code: The Successful Resolution Applicant has provided to the Resolution Professional an affidavit dated 08.01.2024 confirming eligibility u/s. 29A of the Code. In addition, the Applicant along with an additional affidavit dated 21.12.2023 filed a report of an independent third party on the eligibility of the Successful Resolution Applicant to submit the Resolution Plan. M. Relief and Concessions The Successful Resolution Applicant has sought various reliefs and concessions based on the clean slate concept laid down by the Hon'ble Supreme Court in various judgements, reliefs which are necessary to keep the Corporate Debtor as going concern, release from any and all liabilities/proceedings, disputes and noncompliance prior to the Approval Date and extended period for renewal or revival of licenses for running the business of the Corporate Debtor. 20. The Applicant further submits that the Resolution Plan complies with Section 30 (2) of the Code and Regulation 38 (A) of the CIRP Regulations. The RP has also provided a complian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution Plan approved by the CoC is lower than the Corporate Debtor's liquidation value. However, in Maharashtra Seamless Limited v. Padmanabham Venkatesh and Ors. Civil Appeal Nos. 4242 of 2019, the Hon'ble Supreme Court noted that there is no provision in the Code or CIRP Regulations under which the bid of any Resolution Applicant has to match the liquidation value arrived at. Thus, the CoC, in its commercial wisdom, can accept a Resolution Plan having a lower value in comparison with the liquidation value of the corporate debtor, should the resolution plan be otherwise feasible and viable. 29. In K Sashidhar v. Indian Overseas Bank Others (in Civil Appeal No.10673/2018 decided on 05.02.2019) the Hon'ble Apex Court held that if the CoC has approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan, as approved by the CoC, meets the requirements specified in Section 30(2). The Hon'ble Apex Court further ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Amit Mahendrabhai Shah' is hereby approved. It shall become effective from this date (the 'Approval Date' as per the Resolution Plan) and form part of this order. It shall be binding on the Corporate Debtor, its employees, members, and 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 is due, guarantors and other stakeholders involved in the Resolution Plan. 34. In terms of the judgment of Hon'ble Supreme Court in the matter of Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited (Civil Appeal No. 8129 of 2019 decided on 13.04.2021) (2021) SC 212, on the date of the approval of the Resolution Plan by the Adjudicating Authority, all such claims which are not a part of the Resolution Plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect of claims, which are not a part of the Resolution Plan. Accordingly, no person including the Central Government, any State Government, or any local authority, guarantors, and other stakeholders, wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41. The guarantors and third-party security providers (not the Corporate Debtor or the Resolution Applicant) shall continue to be liable to the Financial Creditors for the unpaid debt under their guarantees. However, such guarantors shall not be entitled to exercise any right of subrogation in respect of such amounts against the Corporate Debtor and/or the Resolution Applicant. 42. If any application(s) relating to preferential/fraudulent transactions under Sections 43 and 66 of the Code is pending before the Tribunal, the same shall be pursued by the RP at the costs and expenses of the Corporate Debtor. However, the recovery, if any, shall be distributed to the stakeholders of the Corporate Debtor. 43. Other reliefs and concessions not covered in the aforesaid paragraphs including exemption from levy of stamp duty, fees, and registration charges that may be applicable in relation to this Resolution Plan and its implementation are not granted. 44. The moratorium declared under Section 14 of the Code shall cease to have effect from this date. 45. The Applicant shall forward all records relating to the conduct of the CIRP and the Resolution Plan to the IBBI along with a copy of this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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