2021 (4) TMI 1313 - Tri - Insolvency and Bankruptcy

Bharat Forge's Resolution Plan Approved by NCLT with 100% Vote Share

The National Company Law Tribunal, Ahmedabad, approved the Resolution Plan submitted by Bharat Forge Limited with a 100% majority voting share, confirming ... Approval of Resolution Plan - Section 30(6) and 31 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is found that the CoC has approved the plan with 100% voting share in favour of the approval of the plan filed by Bharat Forge Limited. Moreso, the Resolution Applicant fulfills the mandatory contents of the Resolution Plan as provided under Regulation 38 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016. Keeping in view such object behind the enactment of the Code, intention of the Legislature, that the priority is to be given to the resolution than liquidation in the larger interests of the public, workmen, stakeholders and the other employees of the corporate debtors in the interest of justice and in order to achieve the object of the Code and liquidation of a company can be only as a last resort, wherein, all efforts for bringing Resolution Plan were failed or it cannot be found workable in the larger public interest. Hence, now the approval of Resolution Plan by this Adjudicating Authority is rule as per the apex court's decision in the matter of K. Sashidhar Vs. Indian Overseas Bank & Ors. [2019 (2) TMI 1043 - SUPREME COURT] - The Court referred to its judgment in K Sashidhar's matter wherein it was provided that there is no provision under the Code which empowers the Adjudicating Authority to oversee the justness of the reason or the commercial decision taken by the financial creditors in approving or rejecting the proposed resolution plan. The apex court upheld the autonomy of the COC regarding the commercial matters and decisions that cannot be questioned by the AA. Extinguishment of claim, Concession and Relief in Resolution Plan - HELD THAT:- It is to be mention herein that since all the Financial Creditors, Operational Creditors and other Stakeholders have already lodged their claims during the CIRP and the same has been already considered by CoC and accordingly, Resolution Plan has been approved by CoC with majority. The claims of any Stakeholder and others, if remained unaddressed or not considered by CoC, shall not claim upon Corporate Debtor after the approval of Resolution Plan. Furthermore, if there is any proceeding pending before any competent authority(s), Resolution Applicant may approach the said authority for appropriate order. The Resolution Plan is approved - application allowed. Issues Involved:1. Approval of the Resolution Plan under Section 30(6) and 31 of the Insolvency and Bankruptcy Code, 2016.2. Compliance with the requirements under Regulation 38 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.3. Consideration of stakeholders' interests.4. Implementation schedule of the Resolution Plan.5. Extinguishment of claims, concessions, and reliefs in the Resolution Plan.6. Jurisdiction of the Adjudicating Authority in commercial decisions of the Committee of Creditors (CoC).7. Dismissal of IA 130 of 2021 as infructuous.Issue-wise Detailed Analysis:1. Approval of the Resolution Plan:The application was filed by the Resolution Professional (RP) of the Corporate Debtor under Sections 30(6) and 31 of the Insolvency and Bankruptcy Code, 2016 (IB Code) seeking approval of the Resolution Plan along with addendums. The CoC approved the Resolution Plan submitted by Bharat Forge Limited with a 100% majority voting share. The RP confirmed that the Resolution Plan complies with the requirements under Section 30 of the IB Code.2. Compliance with Regulation 38:The Resolution Plan was examined to ensure it meets the mandatory contents as stipulated under Regulation 38 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The plan identified specific sources of funds for paying insolvency resolution process costs, liquidation value due to operational creditors, and liquidation value due to dissenting financial creditors. It also included a statement on how it dealt with the interests of all stakeholders.3. Consideration of Stakeholders' Interests:The Resolution Applicant took into account the interests of all stakeholders of the Corporate Debtor. The tabular summary of payments to creditors under the approved Resolution Plan included provisions for IRP costs, workmen and employee dues, secured financial creditors, and other operational creditors. The plan also addressed the claims of financial creditors, operational creditors, and other stakeholders.4. Implementation Schedule:The implementation schedule proposed by the Resolution Applicant was detailed, with specific timelines for actions such as the establishment of an acquisition SPV, delisting of the Corporate Debtor, opting for a concessional tax regime, and infusion of funds into the Corporate Debtor. The schedule was designed to ensure timely and effective implementation of the Resolution Plan.5. Extinguishment of Claims, Concessions, and Reliefs:The judgment clarified that no claims against the Resolution Applicant would lie from the date of approval of the Resolution Plan. Any pending proceedings before competent authorities would require the Resolution Applicant to approach them for appropriate orders. The approval of the Resolution Plan did not automatically waive or abate legal proceedings pending by or against the Corporate Debtor.6. Jurisdiction of the Adjudicating Authority:The judgment referenced the Supreme Court's decisions in K. Sashidhar vs. Indian Overseas Bank and Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta, emphasizing that the Adjudicating Authority has limited jurisdiction to interfere in the commercial decisions of the CoC. The CoC's decision on the Resolution Plan is final, and the Adjudicating Authority's role is limited to ensuring compliance with the IB Code's objectives.7. Dismissal of IA 130 of 2021:The application IA 130 of 2021, filed by a shareholder and promoter of the Corporate Debtor, sought to implement the terms of a settlement and withdraw the CIRP. However, since the Resolution Plan was already approved by the CoC and the Adjudicating Authority, the application was dismissed as infructuous.Conclusion:The National Company Law Tribunal, Ahmedabad, approved the Resolution Plan submitted by Bharat Forge Limited, confirming its compliance with the IB Code and Regulation 38. The plan addressed the interests of all stakeholders and included a detailed implementation schedule. The judgment emphasized the limited jurisdiction of the Adjudicating Authority in commercial decisions of the CoC and dismissed IA 130 of 2021 as infructuous.