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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 ..... hah ('Successful Resolution Applicant') and duly approved by 93.76% of the Committee of Creditors ("CoC") of the Corporate Debtor through E-voting held on 02.09.2022 - 04.09.2022. 2. The Applicant submits that on an application filed by the Operational Creditor, M/s. Sarla Performance Fibers Ltd under Section 9 of the Code. the Corporate Insolvency Resolution process ('CIRP') was initiated against the Corporate Debtor vide Order of this Tribunal dated 02.12.2021, and Mr. Vinit Gangwal was appointed as Interim Resolution Professional ('IRP'). 3. The IRP published a public announcement in Form A inviting claims on 5th December 2021, with the last date for submission of claims on 16th December 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... July 11, 2022, Mr. Arya informed the CoC of his inability to submit a proposal. 9. In the 8th Meeting of the CoC held on 12th July 2022, the CoC invited the Prospective Resolution Applicants to present their plans. The CoC, with 66% of the voting, resolved that the Prospective Resolution Applicants be directed to improve their Financial Bid while giving these observations: (a) The financial offer is required to be improved considering the significant difference between the Financial Bid and the Liquidation Value derived for the Corporate Debtor. (b) That preference will be given for upfront payment proposed in the Resolution Plan rather than a deferred payment structure. (c) The Applicant should consider the value of the security held by the respective Financial Creditors 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 secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 members with a combined voting share of 93.76% voted in favor, while 3 members with a voting share of 1.15% voted against. The remaining 8 members abstained from voting. 15. In light of the above voting, Mr. Amit Mahendrabhai Shah was declared a Successful Resolution Applicant (SRA) and the SRA furnished the Performance Security Deposit of Rs 1,65,70,000/- (Rupees One Crore Sixty-Five Lakhs Seventy Thousand only) on 08th September 2022. 16. This Tribunal approved an extension of CIRP by 90 days beyond the initial 180 days as per the order dated 09.06.2022. Additionally, an exclusion of 60 days was permitted by the order dated 09.09.2022. This application was filed on 16.09.2022 before the CIRP period was set to expire on 28.10.2022. 17. Brief Background of the Corporate Debtor The Corporate Debtor was incorporated on 16th February 1981 and has been engaged in the business of manufacturing Denim 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31,44,278 1,83,82,938 29,34,540 12.68 Operational Creditors (Government dues) 1,93,04,127 1,93,04,127 2,27,789 1.18 Operational Creditors (Others) 18,19,22,313 11,53,16,105 13,29,975 0.73 Other Creditors (Including ESIC and Provident Fund) 44,88,464 44,88,464 24,38,387 54.33 Contingency 93,161 Total 16,57,00,000 The Successful Resolution Applicant filed an affidavit dated 25.09.2024 undertaking to arrange additional amount of Rs. 113,98,744/- towards provident fund which was admitted later by the Applicant. B. Sources of funds as per the Plan The SRA will infuse the full amount in 45 days from the date of approval by the Tribunal for settling all claimants as per the Resolution Plan. The amount will be infused through equity contribution, unsecured loans, quasi-capital from group and associate concerns as well as loans from banks/ NBFC/ Financial Institutions. C. Treatment of Financial Creditors (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date. (ii) The Provident Fund and Gratuity would be paid as per the amounts ascertained by the RP. Further, the SRA through Affidavit dated 25.09.2024 submitted before this Tribunal that further amounts admitted by the RP towards Provident Fund during the pendency of the Application would be paid within 45 days from the date of approval of the Resolution Plan. Similarly, the SRA has undertaken to pay the entire amount of gratuity due to Employees and Workmen in the light of the judgement of the Hon'ble NCLAT in Jet Aircraft Maintenance Engineers Welfare Association v. Ashish Chhawchharia, Resolution Professional of Jet Airways (India) Ltd & Ors (2022) SCC OnLine NCLAT 418. F. Treatment of Operational Creditors (Government Dues) As per the Information Memorandum dated August 10, 2022 and subsequent addendums, RP has received a claim of Rs. 1,93,04,127. RP has admitted 100% claims and SRA will infuse a total of Rs. 2,27,789 as an upfront amount within 45 days from the approval date. G. Treatment of Other Operational Creditors (i) As per the Information Memorandum dated August 10, 2022, and subsequent addendums, the Resolution Professional (RP) has received claims amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets will also be transferred to the reconstituted Board immediately upon approval. K. Implementation and Supervision of the Resolution Plan The SRA will be responsible for implementing the Resolution Plan following its approval. On approval of the Resolution Plan by the Adjudicating Authority, the SRA and Financial Creditors, together, shall form an "Implementation and Monitoring Committee" ('IMC') comprising of 4 (four) persons as below: i. One person, being a Chartered Accountant or a Qualified Resolution Professional registered under the IBBI, shall be appointed as the Supervisor by the Financial Creditors; ii. One representative will be appointed by the SRA; and iii. Two representatives will be appointed by the Financial Creditors. The IMC will include a Supervisor who will prepare quarterly reports on the Corporate Debtor's progress and compliance with the Resolution Plan. Fees for the Monitoring Chairman and any related costs will be covered by the Corporate Debtor's accruals or, if necessary, paid by the SRA. No additional approvals will be required from creditors or stakeholders for ongoing implementation. L. Eligibility of Applicants under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e approval of the Resolution Plan by the Authority if it is satisfied that the Resolution Plan, as approved by the CoC under section 30(4), meets the requirements provided 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. 26. On perusal of the Resolution Plan, it is observed that the Resolution Plan provides for the following: (a) Payment of CIRP Cost as specified u/s 30(2)(a) of the Code. (b) Repayment of Debts of Operational Creditors as specified u/s 30(2)(b) of the Code. (c) For management of the affairs of the Corporate Debtor, after the approval of the Resolution Plan, as specified u/s 30(2)(c) of the Code. (d) The implementation and supervision of the Resolution Plan by the RP and the CoC as specified u/s 30(2)(d) of the Code. 27. The Resolution Plan has been approved by the CoC in its 11th meeting with 93.76 % votes in terms of Section 30(4) of the Code. 28. It is noticed that the resolution amount proposed in the Resolution Plan approved by the CoC is lower than the Corporate Debtor's liquidation value. However, in Maharashtra S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K. Sashidhar (supra)." 31. The 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) held that 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 to a claim which is not a part of the Resolution Plan. 32. In view of the discussions and the law thus settled, we are of the considered view that the instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A), and 39 (4) of the Regulations. The Resolution Plan is also not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law. We are thus inclined to allow the Application in the following terms. ORDER 33. The Application IA. No. 2871 of 2022 in C.P.(IB) 1896 of 2018 is allowed and the Resolution Plan submitted by 'Amit Mahendrabhai Shah' is hereby approved. It shall become effective from this date (the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any of the creditors or shareholders of the Corporate Debtor. The Resolution Applicant is at liberty to file the necessary application(s) with the Stock Exchanges to get the shares relisted. 38. The Monitoring Committee, as proposed in the Resolution Plan, shall be constituted to supervise and implement the Resolution Plan. 39. In accordance with Section 32A of the Code, the liability of the Corporate Debtor for an offence committed prior to the commencement of the Corporate Insolvency Resolution Process shall cease and the Corporate Debtor shall not be prosecuted for such an offence committed prior to the commencement of Corporate Insolvency Resolution Process from the date of this order. 40. The approval of the Resolution Plan shall not be construed as a waiver of any future statutory obligations and shall be dealt with by the appropriate Authorities in accordance with law. The Corporate Debtor may obtain necessary approval required under any law for the time being in force from the Appropriate Authority within a period of one year from the date of approval of the Resolution Plan. 41. The guarantors and third-party security providers (not the Corporate Debtor or the Resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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