Tribunal Upholds Resolution Plans for Metallics & Value Steel, Dismissing Objections and Affirming Compliance.

The Tribunal approved the Resolution Plans for the interlinked companies, Metallics and Value Steel, submitted by the Consortium of Carval Investors LLP and Nithiya Capital Resources Advisors LLP, which had been endorsed by the Committee of Creditors with 88.9% votes. The Tribunal dismissed objections from the unsuccessful Resolution Applicant and Operational Creditors, including allegations of discrimination and material suppression of facts. It upheld the commercial decisions of the CoC, granted certain concessions and exemptions to the Successful Resolution Applicant, and confirmed compliance with the Insolvency and Bankruptcy Code, 2016. Objections regarding conditional offers and CCI approval were also dismissed, affirming the procedural integrity of the Resolution Plans.

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Issues Involved:
1. Joint hearing of Resolution Plans for two interlinked companies.
2. Approval of Resolution Plans by the Committee of Creditors (CoC).
3. Urgent hearing of applications during COVID-19 lockdown.
4. Compliance with Section 30(2) and Section 31 of the Insolvency and Bankruptcy Code (IBC), 2016.
5. Objections raised by unsuccessful Resolution Applicant and Operational Creditors.
6. Concessions and exemptions sought by the Successful Resolution Applicant.
7. Objections by Jatia Group regarding conditional offer and non-compliance with CCI approval.
8. Allegations of discrimination against Operational Creditors.
9. Allegations of material suppression of facts.

Detailed Analysis:

1. Joint Hearing of Resolution Plans for Two Interlinked Companies:
The Tribunal noted that the functioning of M/s. Uttam Galva Metallics Limited (Metallics) and M/s. Uttam Value Steel Limited (Value Steel) was interlinked. Consequently, the National Company Law Tribunal (NCLT), Mumbai Bench, ordered a joint hearing of the Resolution Plans filed for these companies.

2. Approval of Resolution Plans by the Committee of Creditors (CoC):
The Resolution Plans submitted by the Consortium of Carval Investors LLP and Nithiya Capital Resources Advisors LLP were approved by the respective CoCs with 88.9% votes. The Resolution Professional (RP) filed the approved plans before the Tribunal for approval under Section 31 of the IBC.

3. Urgent Hearing of Applications During COVID-19 Lockdown:
The CoC moved an urgent application for the hearing of pending applications citing the expiration of the performance guarantee. Despite objections from Noble Resources International Pte Limited, the Tribunal allowed the urgent hearing, emphasizing the necessity for banks to realize dues during the COVID-19 crisis.

4. Compliance with Section 30(2) and Section 31 of the IBC, 2016:
The RP issued certificates confirming compliance with Section 30(2) of the IBC. The Tribunal examined the provisions for payment to stakeholders and other terms of the Resolution Plans, including the implementation through a Special Purpose Vehicle (SPV) and capital reduction.

5. Objections Raised by Unsuccessful Resolution Applicant and Operational Creditors:
Applications filed by the unsuccessful Resolution Applicant (SSG) and an Operational Creditor (Noble) were dismissed on merits. The Tribunal found no merit in the objections raised regarding the approval process and compliance issues.

6. Concessions and Exemptions Sought by the Successful Resolution Applicant:
The Tribunal granted certain concessions and exemptions sought by the Successful Resolution Applicant, including procedural waivers, continuation of approvals, and tax exemptions. However, it clarified that the implementation of the Resolution Plan was not contingent on these concessions.

7. Objections by Jatia Group Regarding Conditional Offer and Non-Compliance with CCI Approval:
Jatia Group objected to the conditional nature of Carval's Resolution Plans and the lack of prior approval from the Competition Commission of India (CCI). The Tribunal held that the conditional offer was acceptable as it was approved by the CoC. Regarding CCI approval, the Tribunal noted that the approval was obtained post facto and harmonized the procedural infraction, stating it did not affect the rights of stakeholders.

8. Allegations of Discrimination Against Operational Creditors:
Jatia Group claimed inequitable treatment as they were receiving only 0.19% of their claim. The Tribunal held that the distribution was in accordance with Section 53 of the IBC and that Operational Creditors were not entitled to more than their statutory share. The Tribunal emphasized that commercial decisions of the CoC should not be interfered with unless vitiated by fraud.

9. Allegations of Material Suppression of Facts:
Jatia Group alleged suppression of the fact that Mr. Johannes Sittard was no longer a director of Nithiya. The Tribunal found no evidence that this non-mention caused any material difference to the resolution process and dismissed the allegation.

Conclusion:
The Tribunal approved the Resolution Plans for both Metallics and Value Steel, with the concessions and exemptions granted. Objections raised by Jatia Group and Noble were found to lack merit and were dismissed. The approval process was deemed compliant with the IBC, and the commercial wisdom of the CoC was upheld.

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