2019 (11) TMI 1517 - Tri - Insolvency and Bankruptcy

Tribunal approves Resolution Plan under Insolvency Code

The Tribunal allowed the application for approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016. The Resolution ... Approval of the Resolution Plan - Section 30(6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- On perusal of the Resolution Plan, it is found that Resolution Applicant viz. M/s. Fitcast Founders & Engineers Private Limited, is a company engaged in the manufacturing and marketing of CI Castings and other Castings which are having a direct relevance with the business of the Corporate Debtor and accordingly, the promoters are to be considered as from the same line of business having better understanding of the manufacturing process, market as well as entire technical aspects which shall definitely result into proper resolution of the Corporate Debtor. The RA along with its consortium member viz. Omkara Assets Reconstruction Private Limited is having adequate net worth and accordingly, the commitment by the RA can be fulfilled without any hesitation. Section 53 of the Code lists the priorities to be given to the beneficiaries, of liquidation value of the assets of the Corporate Debtor. The provisions of Section 53 make it amply clear that Operational Creditors are at the end of the list of beneficiaries as the Secured Financial Creditors have edge over the others - It would also be pertinent to mention here that Operational Creditors have no locus standi as far as approval of the Resolution Plan by the CoC is concerned. On perusal of the records, it is found that the Resolution Plan confirms to the criteria as provided under clauses (a) to (f) in section 30(2) of the Code and the CoC approved the Resolution Plan by 67.08 per cent majority of voting share. However, during the course of proceedings, the Bank of India submitted their acceptance to the Resolution Plan making the approval of the Resolution Plan by 83.89 per cent. The Resolution Plan also confirms to such other requirements as may be specified by the Board. The decisions of the CoC are based on their commercial wisdoms, hence does not attract any interference - On perusal of the Resolution Plan, it is found that it meets the requirement of Section 31 r/w Section 30(2) of the Code. Therefore, the present application IA 352 of 2019 is allowed subject to certain observations. The approval of the Resolution Plan does not mean automatic waiver or abetment of any legal proceedings which are pending by or against the Company/Corporate Debtor as those are the subject matter of the concerned Competent authorities having their proper/own jurisdiction to pass any appropriate order as the case may be - not allowing the above said Clause No. 14 of the Resolution Plan is not going to make any hindrance for proper implementation of the Resolution Plan as those are the subject matter of the concerned/appropriate Competent Authorities. The approved Resolution Plan shall come into force with immediate effect - application allowed. Issues Involved:1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016.2. Compliance with the provisions of the Insolvency and Bankruptcy Code, 2016 and related regulations.3. Eligibility of the Resolution Applicant under Section 29A of the Code.4. Voting and approval process by the Committee of Creditors (CoC).5. Distribution of payments to various creditors and stakeholders.6. Implementation and supervision of the Resolution Plan.7. Legal proceedings and reliefs sought by the Resolution Applicant.Detailed Analysis:1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016:The application IA No. 352 of 2019 was filed by the Resolution Professional (RP) of the Corporate Debtor, M/s. Shaifali Rolls Limited, seeking approval of the Resolution Plan submitted by Respondent No. 3. The Resolution Plan was approved by the CoC with 67.08% votes in favor, as per the provisions of the Code.2. Compliance with the provisions of the Insolvency and Bankruptcy Code, 2016 and related regulations:The RP made a public announcement inviting claims from creditors and constituted the CoC as per Section 21 of the Code. The CoC approved the eligibility criteria for inviting Expression of Interest (EoI) and extended the CIRP period by 90 days beyond 180 days. The RP received two resolution plans, and the plan from M/s. Fitcast was discussed and approved by the CoC.3. Eligibility of the Resolution Applicant under Section 29A of the Code:The CoC discussed the eligibility of M/s. Fitcast, considering the declaration of the Corporate Debtor and its directors as willful defaulters. A legal opinion was obtained, which gave a positive conclusion over the selection of M/s. Fitcast as a prospective Resolution Applicant.4. Voting and approval process by the Committee of Creditors (CoC):The CoC held multiple meetings to discuss and negotiate the Resolution Plan. The final revised plan was submitted on 24th May 2019 and was E-voted till 8 PM on 4th June 2019, with a voting summary showing 67.08% in favor. The RP confirmed the compliance of the Resolution Plan with Section 30(2) of the Code and Regulation 38A of the CIRP Regulations.5. Distribution of payments to various creditors and stakeholders:The Resolution Plan proposed payments to CIRP costs, workmen and employees' dues, operational creditors, financial creditors, and statutory creditors. The total payment proposed was Rs. 19,20,00,000. The plan also included provisions for additional capital expenditure and operating expenses.6. Implementation and supervision of the Resolution Plan:A Monitoring Committee was to be formed, including members of the new management and the present RP as Chairman, to monitor the activities of the Corporate Debtor until the final payment. The existing equity and preference shares were to be re-rated and reorganized.7. Legal proceedings and reliefs sought by the Resolution Applicant:The approval of the Resolution Plan does not mean automatic waiver or abatement of any legal proceedings pending by or against the Company/Corporate Debtor. The Resolution Applicant may approach competent authorities for appropriate reliefs sought in the Resolution Plan.Conclusion:The Tribunal, after reviewing the compliance with Section 30(2) of the Code and the approval by the CoC, allowed the application IA 352 of 2019. The Resolution Plan was found to meet the requirements of Section 31 r/w Section 30(2) of the Code, and the Tribunal directed that the approved Resolution Plan shall come into force immediately, subject to existing laws and necessary approvals. The Resolution Professional was also directed to forward all records to the Insolvency and Bankruptcy Board of India. Any other pending IAs were disposed of as infructuous.