2019 (4) TMI 251 - Tri - Insolvency and Bankruptcy

Tribunal Approves Resolution Plan for The Rubber Products Ltd.

The Tribunal approved the Resolution Plan for The Rubber Products Ltd., confirming compliance with IBC provisions and CIRP regulations. The plan addressed ... Corporate insolvency procedure - Resolution Plan approval by the Committee of Creditors of the Debtor Company - Resolution Applicant is seeking waiver in respect of number of liabilities - HELD THAT:- Resolution Applicant is seeking waiver in respect of number of liabilities, however, the same should be restricted to those government liabilities which are ascertained and crystallised as on the date when the CIRP commenced. On commencement of CIRP due to pronouncement of moratorium if any tax is levied, the same requires waiver. The approval of the CoC of a Resolution Plan is to be accepted in toto by the Adjudicating Authority if a 75% voting share approves the said Plan. Because of the latest decision the scope of any suggestion or alteration in the impugned Resolution Plan is very limited. As far as the procedure is concerned, in this case the same has been followed as per the provisions of the Insolvency Code, therefore, the Resolution Plan has to be approved. On the approval of the Resolution Plan, this Bench directs that moratorium order passed by this Tribunal under Section 14 of the Code shall cease to effect and that the Resolution Professional shall forward all the record relating to the conduct of the corporate insolvency resolution process and the Resolution Plan to the Insolvency and Bankruptcy Board of India to be recorded on its database. Copy of this order be communicated to the Resolution Professional, Resolution Applicant, Financial Creditors and the counsel representing the guarantors of the suspended Board of Directors. Issues Involved:1. Confirmation and approval of the Resolution Plan under Section 30(6) of IBC, 2016.2. Compliance with CIRP regulations and Section 30(2) of IBC.3. Financial and operational creditors' claims and their settlement.4. Valuation and comparison between valuation and Resolution Plan.5. Waiver of liabilities and statutory dues.6. Share capital structure post-approval of the Resolution Plan.Issue-wise Detailed Analysis:1. Confirmation and Approval of the Resolution Plan:- A Miscellaneous Application was filed by the Resolution Professional (RP) under Section 30(6) of IBC, 2016, seeking confirmation and approval of the Resolution Plan approved by the Committee of Creditors (CoC) for the Corporate Debtor, The Rubber Products Ltd.- The Corporate Debtor initiated the Corporate Insolvency Resolution Process (CIRP) against itself under Section 10 of IBC, 2016, which was admitted on 02.01.2018, appointing Mr. Manoj Agarwal as the Interim Resolution Professional (IRP).2. Compliance with CIRP Regulations and Section 30(2) of IBC:- The IRP took several steps including public announcement, constitution of CoC, appointment of valuers, and preparation of information memorandums.- The CoC resolved to appoint the IRP as the RP and invited Expressions of Interest (EoI) for submitting a Resolution Plan.- The RP received and revised resolution plans from interested parties, and the final revised plan was approved by 100% of the CoC's voting share.- The RP confirmed compliance with Section 30(2) of IBC and other mandatory requirements under CIRP regulations, including the eligibility of the Resolution Applicant and the feasibility and viability of the Resolution Plan.3. Financial and Operational Creditors' Claims and Settlement:- The Resolution Plan addressed the interests of various stakeholders, including workmen, employees, secured financial creditors, operational creditors, statutory dues, and unsecured financial creditors.- The plan proposed specific amounts for the settlement of claims within stipulated timelines, ensuring priority payment to operational creditors as per Regulation 38 of CIRP Regulations.- A detailed list of financial and operational creditors along with their claimed and admitted amounts was provided.4. Valuation and Comparison Between Valuation and Resolution Plan:- Two valuers were appointed to determine the liquidation value of the Corporate Debtor.- The fair value was determined to be Rs. 30,38,19,397.85, and the liquidation value was Rs. 19,66,46,250.30.- The Resolution Plan proposed to accept and discharge liabilities amounting to Rs. 21,25,00,000, which was higher than the liquidation value, ensuring a better outcome for creditors.5. Waiver of Liabilities and Statutory Dues:- The Resolution Plan included waivers for statutory liabilities and contingent liabilities incurred before the commencement of CIRP.- The plan sought waivers for various dues, including VAT, Sales Tax, Income Tax, Excise, Customs, and other statutory liabilities, ensuring no disruption to the revival process.- The plan also proposed exemptions from certain provisions of the Companies Act and other regulatory requirements.6. Share Capital Structure Post-Approval of the Resolution Plan:- The Resolution Plan proposed changes to the share capital structure, including the reduction of existing shares and the issuance of new shares to the Resolution Applicants.- The comparative chart of the existing and proposed share capital structure was provided, detailing the changes in shareholding post-approval of the Resolution Plan.Conclusion:- The Tribunal approved the Resolution Plan, noting compliance with all procedural requirements and the latest Supreme Court ruling in K. Shashidhar v. Indian Overseas Bank, which emphasized the acceptance of CoC-approved plans.- The moratorium order under Section 14 of the Code ceased to effect, and the RP was directed to forward all records to the Insolvency and Bankruptcy Board of India.- The order was communicated to all relevant parties, including the Resolution Professional, Resolution Applicant, Financial Creditors, and counsel representing the guarantors of the suspended Board of Directors.