2020 (1) TMI 1183 - Tri - Insolvency and Bankruptcy

NCLT Approval: Resolution Plan by SNJ Distilleries Upheld, Director's Challenge Dismissed

The National Company Law Tribunal, Chennai approved the Resolution Plan submitted by SNJ Distilleries Private Limited, which was previously sanctioned by ... Approval of Resolution Plan - HELD THAT:- For the CoC has approved the Resolution Plan with 100% voting by exercising its commercial wisdom and by this Resolution Plan 100% payment would come to the creditors and workmen, we are of the considered opinion that the COC has approved the Resolution Plan in accordance with Section 30 and Regulations there to, in furtherance of it, for the Resolution Plan is in accordance with law as contemplated under Section 31 of the Code, we hereby approve the Resolution as recommended by the COG. Application dismissed. Issues:1. Approval of Resolution Plan by the National Company Law Tribunal, Chennai.2. Dismissal of applications filed by the erstwhile Director.3. Compliance with Section 12(A) of the Insolvency & Bankruptcy Code, 2016.Issue 1: Approval of Resolution Plan by the National Company Law Tribunal, ChennaiThe case involved an application filed under Section 30(6) of the Insolvency & Bankruptcy Code, 2016 by the Resolution Professional (RP) seeking approval of the Resolution Plan already sanctioned by the Committee of Creditors (COC) on 22.07.2019. The Corporate Insolvency Resolution Process (CIRP) commenced on 01.11.2018, and after various meetings and considerations, the COC approved the Resolution Plan submitted by SNJ Distilleries Private Limited. The Plan outlined payments to stakeholders, including CIRP costs, salaries, and creditor dues. The COC unanimously voted in favor of the Resolution Plan, which was subsequently approved by the National Company Law Tribunal, Chennai.Issue 2: Dismissal of applications filed by the erstwhile DirectorThe erstwhile Director of the Corporate Debtor filed multiple applications challenging the admission order and seeking to set it aside on various grounds, including limitation issues. These applications were successively dismissed by the Tribunal and higher courts, with observations on the lack of power for NCLT to review its orders. Despite multiple appeals and attempts to settle dues with creditors, including Union Bank of India, the applications were consistently dismissed due to procedural non-compliance and delays in filing required documents and applications as per the Insolvency & Bankruptcy Code.Issue 3: Compliance with Section 12(A) of the Insolvency & Bankruptcy Code, 2016The Resolution Professional highlighted non-compliance with Section 12(A) requirements by the suspended directors, as no Form-FA was filed, no guarantee provided, and no approval obtained from the COC for the settlement plan. The COC reviewed the draft settlement plan but found it inferior to the approved Resolution Plan in terms of financial credibility. The RP sought approval for the Resolution Plan as it offered substantial benefits to creditors and workmen, ensuring payments in stages and proposing concessions subject to legal consistency. The COC's unanimous approval and compliance with Section 30 and Section 31 of the Code led to the Tribunal's final approval of the Resolution Plan, emphasizing the commercial wisdom exercised by the COC in ensuring full payments to stakeholders.This detailed analysis of the judgment provides insights into the approval process of the Resolution Plan, the dismissal of applications by the erstwhile Director, and the importance of compliance with the statutory requirements under the Insolvency & Bankruptcy Code, 2016.