2019 (10) TMI 1393 - Tri - Insolvency and Bankruptcy

Tribunal Approves Resolution Plan for Metallica Industries

The Tribunal approved the resolution plan submitted by Kamla Industrial Park Limited (KIPL) for Metallica Industries, a Corporate Debtor, under section ... Approval of Resolution Plan - section 30(6) of the I&B Code - HELD THAT:- The documents submitted by the Claimants, do not prove the existence of debt or allotment of Gala to the Claimants. Further, there is no privity of the Corporate Debtor to the loan agreement between the Claimant and the sister concern of the Corporate Debtor. Therefore, the Claim of the Claimants is not maintainable and at this moment Rejected. In light of the rejection of claim of the Claimants, they do not have any locus to challenge the Resolution Plan, and therefore, the objections to the resolution filed by the claimants are also not maintainable and at this moment Rejected. The erstwhile Promotor has filed objections to the approval of the resolution plan on the grounds of alleged suppression of facts by the RP, careful non consideration of various facts available on record with the State Bank of India and non-compliance of the requisitions of section 30 and section 31 of the I&B Code - the compliance of various sections of the I&B Code and is certified by the RP. Further, the resolution plan is approved by the CoC in its commercial wisdom. Therefore, we do not find any merit in objections raised by the erstwhile promoter of the Corporate Debtor and the same are rejected. Application disposed off. Issues Involved:1. Approval of the resolution plan under section 30(6) of the Insolvency and Bankruptcy Code (I&B Code), 2016.2. Objections by claimants challenging the rejection of their claims as secured financial creditors.3. Objections by the suspended director and guarantor regarding the resolution plan.4. Objections by the erstwhile promoter of the Corporate Debtor.5. Disposal of miscellaneous applications related to the resolution plan.Issue-wise Detailed Analysis:1. Approval of the Resolution Plan:The Miscellaneous Application (MA) No. 660 of 2019 was filed under section 30(6) of the I&B Code for the approval of the resolution plan for the Corporate Debtor, Metallica Industries, submitted by Kamla Industrial Park Limited (KIPL) and approved by the Committee of Creditors (CoC). The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor on 13-4-2018. The Resolution Professional (RP) published an Expression of Interest (EOI) and received five EOIs. The CoC reconstituted on 30-10-2018 to include Gala Allottees as financial creditors. Two resolution plans were received, but KIPGOWA withdrew its plan, leaving KIPL's plan, which was approved by the CoC with 85.89% votes.Salient Features of the Resolution Plan:- The Corporate Debtor's major property is a project land in Mumbai.- The Resolution Applicant proposed to acquire 100% equity ownership, extinguish existing shareholders' interests, and issue fresh shares.- Payment proposals included CIRP costs, secured financial creditors (State Bank of India), unsecured financial creditors (Gala Allottees), and operational creditors.- The plan proposed to pay outstanding dues to BMC and appoint a monitoring agency.- The plan was financed by contributions from Gala owners and sale of unsold galas.The Tribunal approved the resolution plan with modifications, binding on all stakeholders, and directed the RP to forward all records to the IBBI.2. Objections by Claimants:Claimants filed applications challenging the rejection of their claims as secured financial creditors. They had granted loans to a sister concern of the Corporate Debtor, which was allegedly assigned to the Corporate Debtor. The RP rejected their claims due to lack of privity of contract and improper documentation. The Tribunal found no privity of contract between the Corporate Debtor and the claimants and rejected their claims and objections to the resolution plan.3. Objections by Suspended Director and Guarantor:The suspended director and guarantor objected to the resolution plan, particularly the clause allowing the secured financial creditor to proceed against guarantors. The Tribunal referenced the NCLAT judgment in Lalit Mishra v. Sharon Bio-Medicine Ltd., which upheld creditors' rights to enforce personal guarantees. The Tribunal found no merit in the objections and rejected them.4. Objections by Erstwhile Promoter:The erstwhile promoter objected on grounds of alleged suppression of facts and non-compliance with sections 30 and 31 of the I&B Code. The Tribunal found that the resolution plan complied with the I&B Code and was approved by the CoC in its commercial wisdom. The objections were rejected.5. Disposal of Miscellaneous Applications:- MA 854/2019 filed by Mrs. Saroj Gupta was disposed of based on consent terms agreed upon by the parties.- MA 977/2019 filed by various Gala/Unit purchasers seeking to support the resolution plan was disposed of in terms of the order in MA 660/2019.Conclusion:The Tribunal approved the resolution plan submitted by KIPL with modifications, binding on all stakeholders, and dismissed the objections and claims challenging the resolution plan. The Tribunal directed the RP to forward all records to the IBBI.