2021 (6) TMI 1086 - Tri - Insolvency and Bankruptcy

Tribunal Upholds Approved Resolution Plan, Emphasizes Timely Value Maximization

Joseph Joseph and Ors. Versus Churakulam Tea Estate Pvt. Ltd. and Ors.

The Tribunal dismissed the application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, on June 30, 2021. The Applicants' request to set ... Approval of Resolution Plan - Corporate Debtor is a Micro, Small or Medium Enterprise or not - Annexure-A/1 is an Acknowledgement issued on 23.03.2015 by the Department of Industries, Government of Kerala valid for a period of 2 years which has already expired - Section 60 (5) of the Insolvency and Bankruptcy code, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016 - HELD THAT:- If the Corporate Debtor is a Micro, Small or Medium Enterprise is entitled to file the Resolution Plan, Section 240 A which specifically dispenses the applicability of Section 29A clause (c) to (h) in case the Corporate Debtor is a Micro, Small or Medium Enterprise as per the Amendment Act 26 of 2018. The intention behind the enactment of this provision was to grant exemptions to Corporate Debtor which are MSME(s), by permitting a promoter who is not a wilful defaulter or covered under any other specific disqualification as provided under Section 29A, to bid for the Resolution Plan of an MSME. In the present case as per Regulation 36-A Resolution Professional Published Form G, on 17.02.2020, within 35 days i.e. on 115th day, final list of the Resolution Applicant has to be prepared by the Resolution Professional. EoI was received from 2 Resolution Applicants, out of which one was found eligible. Further the 3rd CoC decided to extent the time for submission of EOI for further 10 days and reissue the FORM G. No fresh EoI has been received - In the 10th CoC meeting dated 20.11.2020 it was unanimously approved the Resolution Plan in compliance with the provisions of the I&B Code,2016. Applicants who are also a member of the CoC was silent during the CIRP period and they want to submit the plan after the approval of Resolution Plan by the Adjudicating Authority on 08.01.2021. As Corporate Insolvency Resolution Process is a time bound measure, value maximization has also to be in time bound manner. At this late stage, this Tribunal cannot allow this application to set aside the approved Resolution Plan and allow the applicants to submit a Resolution Plan - Application dismissed. Issues:Application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 to direct consideration of a Resolution Plan and set aside another plan.Analysis:1. The Applicants, erstwhile promoters of the Corporate Debtor, sought to submit a Resolution Plan under Section 30(1) of the Code. They claimed entitlement due to the Corporate Debtor's MSME status and referred to a decision by NCLAT emphasizing asset value maximization for going concern. They argued that having mobilized funds and the failure of the 4th Respondent's plan, they should be allowed to settle all dues, benefiting all stakeholders.2. The Resolution Professional clarified that the existing CoC continued as the Monitoring Committee, absolving him of duties. The Applicants, ex-directors of the Corporate Debtor, claimed MSME status based on an expired certificate. The Tribunal noted the absence of a valid MSME certificate for the Corporate Debtor.3. The provision under Section 240A exempts MSME Corporate Debtors from certain disqualifications under Section 29A, allowing non-wilful defaulters to bid for Resolution Plans. The Applicants contended the Corporate Debtor's MSME status based on an expired certificate, but no valid proof was presented during the proceedings.4. The Resolution Process timeline was outlined, with the Resolution Plan approved on 08.01.2021. The Tribunal highlighted the time-bound nature of the process and the need for value maximization within set deadlines. Given the late stage of proceedings, the Tribunal dismissed the application to set aside the approved Resolution Plan and allow the Applicants to submit a new plan.5. The Tribunal emphasized the importance of adhering to the time-bound nature of the Corporate Insolvency Resolution Process and maximizing value promptly. Due to the advanced stage of proceedings, the Tribunal deemed it inappropriate to entertain the application to replace the approved Resolution Plan.6. The Tribunal dismissed the application under IA(IBC)/74/KOB/2021 on June 30, 2021, maintaining the decision to uphold the approved Resolution Plan and not allow the Applicants to submit a new plan at a later stage.