Approval of Resolution Plan for Dunar Foods: Success in Reviving Company with 100% Vote

The Resolution Plan proposed by Mr. Amit Gupta was approved by a majority vote of 96.92% in the 12th Committee of Creditors (CoC) meeting, later reaching 100% approval with IDBI Bank's consent. The plan aimed to revive Dunar Foods Limited by infusing funds, settling creditors, and leveraging management expertise. The Resolution Applicant was not found ineligible under Section 29A of the Insolvency & Bankruptcy Code. The Tribunal ruled in favor of the Resolution Plan, waiving outstanding statutory dues and claims predating the Corporate Insolvency Resolution Process (CIRP). An Implementation and Monitoring Committee was established to oversee the plan's execution within 30 months from approval.

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Issues Involved:

1. Approval of the Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016.
2. Eligibility criteria for prospective Resolution Applicants.
3. Extension and exclusion of the Corporate Insolvency Resolution Process (CIRP) period.
4. Evaluation and approval of the Resolution Plan by the Committee of Creditors (CoC).
5. Compliance with Section 29A of the Insolvency & Bankruptcy Code.
6. Financial and operational restructuring of the Corporate Debtor.
7. Waiver of statutory dues and other claims.
8. Implementation and monitoring of the Resolution Plan.

Detailed Analysis:

1. Approval of the Resolution Plan:
An application was moved on 13.06.2018 by the Resolution Professional (RP) under Section 30(6) of the Insolvency & Bankruptcy Code, 2016 (IBC) for approval of a Resolution Plan. The Tribunal passed an order under Section 31(1) of the Code upon receiving the application and the Resolution Plan.

2. Eligibility Criteria for Prospective Resolution Applicants:
During the second CoC meeting on 21.02.2018, the RP proposed a minimum eligibility criterion for potential Resolution Applicants, setting a net worth threshold of Rs. 50 Crores. Invitations for Expression of Interest (EOI) were published in Times Group newspapers on 26.02.2018 and again on 18.04.2018. The eligibility criteria were later revised to a net worth of Rs. 25 crore to attract more applicants.

3. Extension and Exclusion of CIRP Period:
The RP sought and was granted a 90-day extension of the CIRP period on 20.06.2018. Additionally, the RP requested the exclusion of the period from 26.12.2017 to 05.10.2018, lost in litigations, from the CIRP period.

4. Evaluation and Approval of the Resolution Plan by the CoC:
In the sixth CoC meeting on 04.08.2018, the sole Resolution Plan from Mr. Amit Gupta was discussed. The CoC deliberated on the attachment of assets by various statutory authorities and its impact on asset value. The RP informed the CoC about pending appeals against the Enforcement Directorate's attachment order. In subsequent meetings, the CoC decided to invite fresh resolution plans and revised the eligibility criteria. Ultimately, in the 12th CoC meeting on 04.06.2019, Mr. Amit Gupta’s Resolution Plan was approved by a 96.92% majority, later reaching 100% with IDBI Bank's approval.

5. Compliance with Section 29A of the IBC:
The RP confirmed that the Resolution Applicant was not ineligible under Section 29A of the IBC. An affidavit was submitted by the Resolution Applicant confirming compliance with Section 29A.

6. Financial and Operational Restructuring of the Corporate Debtor:
The Resolution Plan aimed to revive the Corporate Debtor, Dunar Foods Limited, by infusing funds for settling past creditors, leveraging management expertise, and attracting top talent. The Resolution Applicant, Mr. Amit Gupta, with significant experience in the rice milling and trading industry, proposed to invest necessary resources to turn around the operations.

7. Waiver of Statutory Dues and Other Claims:
The Resolution Applicant sought a waiver of all outstanding statutory dues and other claims as of the date of the Resolution Plan's approval. The Tribunal ruled that the Resolution Applicant would not be held responsible for any outstanding statutory dues and other claims for the period before the commencement of CIRP.

8. Implementation and Monitoring of the Resolution Plan:
The Resolution Plan included a total payment of Rs. 97.10 crore, with Rs. 87 crore allocated to financial creditors and Rs. 10 lakh to operational creditors. The plan also proposed an additional Rs. 10 crore for working capital. A Monitoring Committee comprising the RP, an independent CoC representative, and a representative of the Resolution Applicant was established to oversee the implementation. The total payment under the plan was to be made within 30 months from the approval date. The Tribunal directed the RP to hand over all records and premises to the Resolution Applicant for operational commencement.

Findings:
The Tribunal found that the Resolution Plan met the required approval threshold by the CoC and was viable for the revival of the Corporate Debtor. The Resolution Plan was binding on all stakeholders, and the "Moratorium" under Section 14 ceased to have any effect. The RP was directed to submit records to the Insolvency & Bankruptcy Board of India and hand over all documents to the Resolution Applicant. The directions and implementation period were effective from the date of receipt of the order.

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