2020 (1) TMI 1328 - Tri - Insolvency and Bankruptcy

Approval of Sterlite Power's Resolution Plan by NCLT - Key Decisions and Compliance

Mr. Bhuvan Madan And Rural Electrification Corporation Versus Ferro Alloys Corporation Limited

The Resolution Plan submitted by Sterlite Power Transmission Limited was approved by the NCLT Cuttack Bench with a 95.15% voting share from the Committee ... Approval of Resolution Plan - Section 30 (6) read with Section 31 (l) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 39 (4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT:- The Resolution Plans were taken up for consideration by the Committee of Creditors. Both the Resolution Plans complied with the mandatory requirements stipulated under Section 30 (2) of the Code read with Regulations thereunder. The Committee of Creditors discussed the feasibility and viability of the Resolution Plans and the capability of the Resolution Applicants to implement the Resolution Plan and carry out the evaluation of the Resolution Plans. Finally, a evaluation matrix was arrived at, as per the scoring rate Sterlite Power Transmission Limited (STPL) scored 91.26%, IMR Metallurgical Resources AG score was 80.42 %. Based on the evaluation criteria set out in the RFRP Sterlite Power Transmission Limited was declared as a highest evaluated Resolution Applicant. The 31st Committee of Creditors Meeting held on 13th November, 2019, the Resolution Plan submitted by M/S Sterlite Power Transmission Limited (SPTL) was approved by the Committee of Creditors by 95.15 % of voting shares. The Resolution Plan submitted by M/S Sterlite Power Transmission Limited (SPTL) i.e. Resolution Applicant, approved by 95.15 % of voting share in 31st Committee of Creditors Meeting dated 13.11.2019 is APPROVED, as per Section 31 (l) of the Insolvency and Bankruptcy Code, 2016. Accordingly, the same shall be binding on the Corporate Debtor and its employees, members, all creditors including Central and State Government and local authorities, guarantors and other stakeholders. Application allowed. Issues Involved:1. Approval of the Resolution Plan under Section 30(6) and Section 31(1) of the Insolvency and Bankruptcy Code, 2016.2. Exclusion of time periods from the Corporate Insolvency Resolution Process.3. Replacement of the Resolution Professional.4. Evaluation and approval of the Resolution Plan by the Committee of Creditors.5. Compliance with mandatory requirements under the Insolvency and Bankruptcy Code and CIR Regulations.6. Applications against the approval of the Resolution Plan.Detailed Analysis:1. Approval of the Resolution Plan:The application was filed by the Resolution Professional under Section 30(6) read with Section 31(1) of the Insolvency and Bankruptcy Code, 2016, along with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, seeking approval for the Resolution Plan submitted by Sterlite Power Transmission Limited (SPTL). The plan was approved by the Committee of Creditors (CoC) with a 95.15% voting share.2. Exclusion of Time Periods:Several applications were filed for the exclusion of days lost in litigation from the Corporate Insolvency Resolution Process (CIRP) period. The NCLT Kolkata Bench initially granted an exclusion of 45 days, which was later extended by the NCLT Cuttack Bench by 30 days and subsequently by 98 days, setting the end date for the CIRP as 14th November 2019.3. Replacement of the Resolution Professional:IA No. 18/CTB/2019 was filed for the replacement of the existing Resolution Professional with Mr. Bhuvan Madan. This was approved by the CoC with 100% voting, and the NCLT Cuttack Bench allowed the application.4. Evaluation and Approval by CoC:The CoC received seven prospective applications for the Resolution Plan, but only SPTL submitted a plan by the extended deadline. Another applicant, IMR Metallurgical Resources AG, was allowed to submit their plan after the deadline. Both plans were evaluated, with SPTL scoring higher (91.26%) compared to IMR (80.42%). The CoC approved SPTL's plan with a 95.15% voting share.5. Compliance with Mandatory Requirements:The Resolution Plan complied with the mandatory requirements under Section 30(2) of the Code and relevant CIR Regulations, including provisions for insolvency resolution process costs, payment to operational creditors, management of the Corporate Debtor’s affairs, implementation and supervision of the plan, and compliance with applicable laws. The plan also addressed the interests of all stakeholders and provided an implementation schedule.6. Applications Against Approval:Several applications were filed against the approval of the Resolution Plan:- CA (IB) No. 160/CTB/2019 by an unsuccessful Resolution Applicant was dismissed.- IA (IB) No. 175/CTB/2019 by the Promoters/Directors of the Corporate Debtor, challenging the plan and proposing a superior settlement, was dismissed. The objections regarding the inclusion of expertise in power and the undervaluation of assets were overruled.- CA (IB) No. 162/CTB/2019 and CA (IB) No. 176/CTB/2019 by the Government of India (GST & Central Excise) were dismissed.Order:The Resolution Plan submitted by Sterlite Power Transmission Limited was approved by the NCLT Cuttack Bench, making it binding on the Corporate Debtor, its employees, members, creditors, including Central and State Governments, local authorities, guarantors, and other stakeholders. The application CA (IB) No. 157/CTB/2019 was allowed.