2018 (9) TMI 338 - Tri - Insolvency and Bankruptcy

Tribunal Approves Resolution Plan for Sirpur Paper Mills Ltd. under Insolvency & Bankruptcy Code

Resolution Professional of The Sirpur Paper Mills Ltd. Versus Committee of Creditors of the Sirpur Paper Mills Ltd., IDBI Bank, State Bank of India, Central Bank of india, Syndicarte Bank, M/s. JK Paper Limited And M/s. Rama Road lines And others

Resolution Professional of The Sirpur Paper Mills Ltd. Versus Committee of Creditors of the Sirpur Paper Mills Ltd., IDBI Bank, State Bank of India, ... Issues Involved:1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016.2. Claim of salary and validity of appointment of Executive Director and CEO.3. Rejection of claim by an operational creditor.4. Rejection of claim by another operational creditor.5. Payment of expenses and fees to the Interim Resolution Professional.Issue-wise Detailed Analysis:1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016:The Resolution Professional filed an application seeking approval of the Resolution Plan for The Sirpur Paper Mills Ltd. The Corporate Insolvency Resolution Process was triggered by M/s. Rama Road Lines, an Operational Creditor, under Section 9 of the IB Code. The process began on 18.09.2017, and Mr. Ram Ratan Kanoongo was appointed as the Resolution Professional. The CoC called for Expressions of Interest and received submissions from seven Resolution Applicants. Only M/s. JK Paper Limited submitted a Resolution Plan before the deadline. The plan was conditional, dependent on benefits and concessions from the Government of Telangana, which were confirmed through a Government Order on 21.03.2018. The CoC approved the final revised Resolution Plan on 16.05.2018 with an 80.66% vote in favor. The plan included payments to various stakeholders totaling Rs. 371.04 crores. The Adjudicating Authority examined the plan and found it compliant with Section 30(2) of the IB Code. The Resolution Plan was approved, binding on all stakeholders, and the moratorium order ceased to have effect.2. Claim of salary and validity of appointment of Executive Director and CEO:The applicant, appointed as Executive Director and CEO, claimed Rs. 13,50,000 towards salary from June 2017 to February 2018. The appointment was initially approved by the Board and later by the AGM. However, the CoC did not approve the remuneration post-CIRP commencement on 18.09.2017. The applicant was on leave from 21.10.2017 to 31.01.2018. The Resolution Professional allowed a claim of Rs. 5,40,000 for the period up to 18.09.2017 and rejected the rest. The claim for the period after CIRP commencement was deemed not covered by Form B, C, or D. The applicant was advised to pursue the claim for the period from 19.09.2017 to 20.10.2017 in an appropriate forum.3. Rejection of claim by an operational creditor (Inox Air Products Pvt Ltd.):Inox Air Products Pvt Ltd. claimed Rs. 1,01,32,362 for the supply of liquid oxygen and related services. The Resolution Professional admitted Rs. 51,67,213 based on the Corporate Debtor's books of account and rejected the rest. The applicant argued that the rejection was solely based on the books without considering other evidence. The Tribunal noted that the claim involved legal aspects and should be decided on evidence. The applicant was allowed to revive the claim before an appropriate forum, with payment to be made proportionately from the amount set apart for operational creditors in the Resolution Plan.4. Rejection of claim by another operational creditor (M/s. FLSmidth Private Limited):M/s. FLSmidth Private Limited claimed Rs. 7,83,50,198 based on an arbitral award. The Resolution Professional rejected the claim, citing the matter as subjudice. The applicant argued that the award should be treated as operational debt. The Resolution Professional later agreed to include the claim in the list of operational creditors and pay proportionately from the amount reserved for operational creditors in the Resolution Plan. The Tribunal directed the Resolution Professional to include and pay the claim accordingly.5. Payment of expenses and fees to the Interim Resolution Professional:M/s. Rama Road Lines sought reimbursement of Rs. 3,50,000 for expenses incurred during the CIRP. The CoC had resolved that the petitioner should bear the IRP's fees for the first 30 days. The Tribunal found this resolution against the provisions of the IB Code and IBBI circulars. The fee payable to the IRP and the expenses for public announcements were deemed part of the Insolvency Resolution Process costs. The Tribunal directed the Resolution Professional to pay the publication expenses and the IRP's remuneration for the first 30 days.Conclusion:The Tribunal approved the Resolution Plan for The Sirpur Paper Mills Ltd., addressed claims and remuneration issues, and directed the Resolution Professional to comply with statutory requirements for costs and fees.