2019 (9) TMI 1487 - AT - Insolvency and Bankruptcy

Approval of Resolution Plan under Insolvency Law | Promoter's Eligibility & Creditor Settlements

The Adjudicating Authority approved the resolution plan submitted by the Promoter, meeting the requirements of the Insolvency and Bankruptcy Code. The ... Approval of Resolution Plan - section 30(2) of the 'I&B Code' - Corporate Debtor' is going concern or not - Non-compliance with Regulation 38 - HELD THAT:- Learned counsel appearing on behalf of the Appellant submitted that the 'resolution applicant' was the erstwhile 'Promoter' and, therefore, is the relevant eligible party under section 29A of the I&B Code. However, such submission cannot be accepted as it has no bar for the 'Promoter' to file 'resolution application', even if otherwise not eligible in terms of section 29A. There is nothing on record to suggest that the 'Corporate Debtor' is an undischarged insolvent or wilful defaulter in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulations Act, 1949 or at the time of submission of 'resolution plan' has an account, classified as 'Non-Performing Asset' (NPA) in accordance with the guidelines of the Reserve Bank of India or that the 'Promotor' or its Directors or has been convicted for any offence punishable with imprisonment or is disqualified to act as a Director under the Companies Act, 2013 or was prohibited by 'Securities and Exchange Board of India' (SEBI) or made any preferential transaction , an undervalued transaction or granted extortionate credit transaction or made fraudulent transaction etc. Corporate Debtor' is going concern or not - HELD THAT:- A 'resolution plan' cannot be rejected on such ground if the resolution applicant can show the feasibility to run the company in future - The 'Committee of Creditors' having gone through the financial aspects, including the viability, feasibility and other conditions of the 'Resolution Plan' and having approved the plan with 74.19% of voting share, this Appellate Tribunal is not inclined to decide such issue. Non-compliance with Regulation 38 - HELD THAT:- It is noticed that the 'Committee of Creditors' has noticed all the aspects and merely because the Appellant is a dissenting financial creditor, no interference is called for in absence of any illegality. Appeal dismissed. Issues:- Application under section 7 of the Insolvency and Bankruptcy Code, 2016- Approval of the resolution plan by the Adjudicating Authority- Challenge by a dissenting financial creditor- Eligibility of the resolution applicant under section 29A of the I&B Code- Going concern status of the Corporate Debtor- Compliance with Regulation 38- Proposal for 100% payment to financial creditorsAnalysis:1. The application under section 7 of the Insolvency and Bankruptcy Code, 2016 was filed by 'Shree Siyaram Automations Private Limited' against 'Beans and More Hospitality Pvt. Limited' leading to the initiation of the Corporate Insolvency Resolution Process. A resolution plan submitted by Mr. Abhay Jain, the Promoter, was approved by the Committee of Creditors, meeting the requirements of section 30(2) of the I&B Code. The Adjudicating Authority approved the plan, emphasizing the full settlement of financial/operational debts of the Corporate Debtor.2. The Adjudicating Authority noted that the Promoter issued an affidavit asserting compliance with section 29A of the I&B Code, which prohibits certain entities from submitting resolution plans. The dissenting financial creditor challenged the order, alleging irregularities.3. The dissenting financial creditor argued that the resolution applicant, being the former Promoter, should be eligible under section 29A. However, the Adjudicating Authority clarified that the Promoter's eligibility to file a resolution application is not restricted by section 29A unless specific disqualifications are present.4. It was contended that the Corporate Debtor was not a going concern. However, the Tribunal explained that the viability and feasibility of the Corporate Debtor should be assessed by the Committee of Creditors, not the Adjudicating Authority or the Appellate Tribunal. As the Committee approved the plan with a significant majority, the Tribunal declined to interfere.5. The argument regarding non-compliance with Regulation 38 was dismissed as the Committee of Creditors had considered all aspects, and dissenting financial creditor status alone did not warrant interference.6. The successful resolution applicant proposed to pay 100% of dues to all financial creditors, including the dissenting creditor. Considering this proposal and the lack of merit in the appeal, the Tribunal dismissed the appeal without costs.