Tribunal Approves Resolution Plan under Insolvency & Bankruptcy Code

The Tribunal approved the Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016, with modifications. The plan submitted by RHIL jointly with MIL was favored by 77.68% of the Committee of Creditors, involving payments to creditors, plant refurbishment, working capital, and process costs. Dissenting financial creditors were entitled to liquidation value. The approved plan included financial and capital restructuring, payment commitments, and business continuity. A Supervision Committee was to oversee the plan's implementation, with new management taking over the Corporate Debtor's operations. The Resolution Plan was binding, emphasizing detailed examination and satisfaction recording, effective immediately.

---

---

Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016.
2. Admission and substitution of the Interim Resolution Professional (IRP).
3. Evaluation and selection of Resolution Plans.
4. Treatment of dissenting financial creditors.
5. Feasibility and implementation of the approved Resolution Plan.
6. Supervision and management post-approval of the Resolution Plan.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016:
An application was moved by the Learned Resolution Professional on 17.01.2018 for approval of a Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016, read with Regulation 39(4) of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) 2016. The Tribunal approved the Resolution Plan as prescribed under Section 31(1) of the Code.

2. Admission and Substitution of the Interim Resolution Professional (IRP):
The Corporate Debtor filed a petition under Section 10 of the Code on 23.06.2017, which was admitted on 10.07.2017. Initially, Mr. U.V.G. Nayak was appointed as the IRP, who carried out duties including publishing the commencement of CIRP, constituting the Committee of Creditors (COC), and appointing valuers. Subsequently, a resolution was passed by the COC for the substitution of the IRP, and Dr. Rajendra M. Ganatra was appointed as the Resolution Professional on 15.09.2017.

3. Evaluation and Selection of Resolution Plans:
Three Resolution Plans were received from Dipti Vegoils Ltd (DVL), Rubberwala Housing and Infrastructure Ltd. (RHIL), and Recon Oil Industries Pvt. Ltd. (Recon). The COC held multiple meetings to evaluate and improve the plans. Ultimately, the COC voted in favor of the Resolution Plan submitted by RHIL jointly with Mukhi Industries Limited (MIL) by 77.68% voting. The Resolution Plan included a commitment to pay Rs. 6224 Lakhs to creditors, invest Rs. 200 Lakhs in plant refurbishment, Rs. 1000 Lakhs in working capital, and Rs. 60 Lakhs in insolvency resolution process costs.

4. Treatment of Dissenting Financial Creditors:
SICOM Limited, an unsecured financial creditor, dissented against the approved Resolution Plan. The Tribunal clarified that dissenting financial creditors are entitled to receive the liquidation value as per Section 30 of the Code and Regulation 38 of the CIRP Regulations. SICOM's claim of Rs. 1.07 Crore was to be considered after the settlement of secured loans.

5. Feasibility and Implementation of the Approved Resolution Plan:
The Tribunal examined the feasibility of the Resolution Plan, which included a detailed financial restructuring plan, capital restructuring, and a commitment to pay outstanding dues to workers and employees. The Plan also provided for the payment of insolvency resolution process costs and the continuation of the company's business operations. The Resolution Plan was found to be in adherence to the regulations and was approved with certain modifications.

6. Supervision and Management Post-Approval of the Resolution Plan:
A Supervision Committee was to be formed to oversee the implementation of the Resolution Plan over the next four years. The Resolution Professional was directed to hand over the charge of the Corporate Debtor, including books of accounts and assets, to the new management. The new promoters were to step into the shoes of the outgoing company, retaining tenancy rights and other agreements.

Conclusion:
The Resolution Plan was approved subject to modifications, binding on the Corporate Debtor and other stakeholders. The Tribunal emphasized the need for a detailed examination and recording of satisfaction before approval. The incoming management was not to be held responsible for any past acts or omissions of the erstwhile management. Directions were issued for the implementation of the Resolution Plan, effective from the date of the order.

---