Resolution plan approved under Section 30(4) with 48-month implementation schedule and Rs. 1.5 crore performance guarantee

The NCLT Chandigarh approved a resolution plan submitted by three applicants under Section 30(4) of the Insolvency and Bankruptcy Code. The plan included a 48-month implementation schedule with payments to various creditors and a performance guarantee of Rs. 1.5 crores through term deposit. The tribunal found the plan compliant with Section 31(1) requirements for effective implementation, with Resolution Professional supervision throughout. The approved plan became binding on all stakeholders including the corporate debtor, creditors, and government authorities. The moratorium order under Section 14 ceased effect, and the Resolution Professional was directed to forward all CIRP records to the Board's database.

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Issues Involved:

1. Determination of the Corporate Debtor's status as a "small enterprise" under the MSME Act, 2006.
2. Approval of the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016.
3. Compliance with the requirements of the Insolvency and Bankruptcy Code, 2016, and related regulations.
4. Voting and approval process by the Committee of Creditors (CoC).
5. Effective implementation and supervision of the Resolution Plan.

Issue-wise Detailed Analysis:

1. Determination of the Corporate Debtor's status as a "small enterprise" under the MSME Act, 2006:
I.A. No. 18/2020 was filed to place on record the Auditor Certificate stating that the Corporate Debtor falls under the definition of "small enterprise" under the MSME Development Act, 2006. The Tribunal accepted and placed this certificate on record, thereby disposing of I.A. No. 18/2020.

2. Approval of the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016:
The Resolution Professional (RP) filed CA No.610/2019 under Section 31 of the Code, seeking sanction of the resolution plan approved by the CoC on 20.07.2019. The Tribunal examined the resolution plan and noted that it was approved by 95.30% of the voting share of the financial creditors. The Tribunal found that the resolution plan met the requirements under Section 30(2) of the Code and had provisions for its effective implementation.

3. Compliance with the requirements of the Insolvency and Bankruptcy Code, 2016, and related regulations:
The RP submitted that all provisions of the Code and Regulations were complied with. The Tribunal verified compliance with Section 30(2) of the Code, which includes payment of insolvency resolution process costs, payment of debts of operational creditors, management of the Corporate Debtor's affairs, implementation and supervision of the resolution plan, and adherence to the law. The Tribunal confirmed that the resolution plan did not contravene any provisions of the law and was feasible and viable.

4. Voting and approval process by the Committee of Creditors (CoC):
The CoC initially constituted with three financial creditors and three operational creditors without voting rights. The CoC approved the resolution plan with 95.30% voting in favor. The Tribunal noted that the resolution plan was approved by the CoC in accordance with the Code and CIRP Regulations. The Tribunal also examined the distribution of voting shares among the financial creditors and confirmed that the plan was approved by the requisite majority.

5. Effective implementation and supervision of the Resolution Plan:
The resolution plan provided for the management and control of the Corporate Debtor by the Resolution Applicant and proposed supervision by the RP for the entire period of implementation. The plan included an implementation schedule of sixteen quarters or 48 months from the date of approval. The Tribunal found that the resolution plan had provisions for its effective implementation and directed the RP to ensure compliance with the performance security requirements.

Conclusion:
The Tribunal approved the resolution plan submitted by the Resolution Applicants, binding it on the Corporate Debtor, its employees, members, creditors, and other stakeholders. The moratorium order ceased to have effect, and the RP was directed to forward all records relating to the CIRP and the resolution plan to the Board.

Order:
CA No.610/2019 was disposed of, and the resolution plan was approved, subject to compliance with performance security requirements.

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