Tribunal approves resolution plan, lifts moratorium, instructs professional to transfer records

The Tribunal approved the resolution plan submitted by the resolution applicant, subject to specified qualifications and directions. The moratorium order was lifted, and the resolution professional was instructed to transfer records to relevant authorities and notify the conclusion of insolvency proceedings.

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Issues Involved:
1. Approval of the resolution plan submitted by the resolution applicant.
2. Eligibility of the resolution applicant under Section 29A of the Insolvency and Bankruptcy Code (IBC), 2016.
3. Examination of the resolution plan's compliance with statutory requirements.
4. Satisfaction of the Adjudicating Authority (AA) with the resolution plan.
5. Payment and settlement of financial and operational creditors.
6. Management and implementation of the resolution plan.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan:
The application was submitted on 8th May 2018, seeking permission to approve the resolution plan by Mr. Mahendra Wig, the sole resolution applicant. The petition was initially filed on 19th July 2017 under Section 10 of the IBC by Wig Associates (P.) Ltd. to initiate corporate insolvency resolution process (CIRP) against itself for an admitted debt of Rs. 4,85,14,000 to Bank of Baroda. The petition was admitted on 24th August 2017, and a moratorium was commenced with the appointment of Mr. S.K. Gofa as the interim resolution professional.

2. Eligibility of the Resolution Applicant under Section 29A:
The primary legal question was whether Mr. Mahendra Wig, related to the promoter directors of the corporate debtor, could submit a resolution plan post the introduction of Section 29A of the IBC. Section 29A, introduced via an Ordinance on 23rd November 2017 and later formalized as the Insolvency and Bankruptcy Code (Amendment) Act, 2017, disqualifies "connected persons" from submitting a resolution plan. Mr. Wig was found to fall under this category. However, the Tribunal concluded that the amended Section 29A was effective from 23rd November 2017, and since the CIRP commenced before this date, the resolution plan was deemed eligible under the old provisions.

3. Examination of the Resolution Plan's Compliance with Statutory Requirements:
The resolution professional submitted valuation reports with an average liquidation value of Rs. 87.60 lakh against a financial creditor claim of Rs. 1,067.39 lakh. The resolution plan was approved by the Committee of Creditors (CoC) with a 100% vote. The plan included a "One Time Settlement" (OTS) offer of Rs. 355 lakh against the principal debt of Rs. 460.16 lakh, approved by Bank of Baroda on 27th March 2018. The plan also included provisions for payment of insolvency resolution process costs, repayment of operational creditors, management of corporate debtor affairs, and implementation and supervision of the resolution plan.

4. Satisfaction of the Adjudicating Authority (AA) with the Resolution Plan:
The AA examined the resolution plan under Sections 30 and 31 of the IBC, emphasizing the need for recording "satisfaction" in writing. The AA's satisfaction is based on a thorough study of the resolution plan, including both objective and subjective analysis, ensuring the plan's alignment with the IBC's objective to revive financially stressed corporate bodies.

5. Payment and Settlement of Financial and Operational Creditors:
The resolution plan proposed a payment schedule for financial creditors with a total settlement amount of Rs. 355 lakh, including adjustments and interest. For operational creditors, the plan proposed a settlement at 5% of their dues, although the liquidation value available for operational creditors was nil. The AA directed that the payment to operational creditors should exceed the liquidated value within the agreed schedule.

6. Management and Implementation of the Resolution Plan:
The resolution applicant proposed to take over the management and control of the corporate debtor during the term of the resolution plan, which was set for one year. The resolution professional was appointed as the monitoring agency for the supervision and implementation of the plan. The applicant affirmed the infusion of Rs. 326.50 lakh into the corporate debtor, with funds sourced from family members and personal property liquidation.

Conclusion:
The Tribunal approved the resolution plan subject to the qualifications and directions mentioned. The moratorium order ceased to have effect, and the resolution professional was directed to forward records to concerned authorities and intimate the closure of insolvency proceedings.

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