Approval of Resolution Plan under Insolvency Code with creditor priorities upheld

The Adjudicating Authority approved the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016, which included various financial provisions and priorities for creditors. Despite objections raised by the Municipal Corporation of Greater Mumbai (MCGM), the plan was found compliant with relevant regulations. MCGM's objections were dismissed as belated and inconsistent, with the Authority directing the plan's implementation and monitoring. The Resolution Professional was mandated to oversee compliance and report on the plan's progress, with the plan binding on all stakeholders and the moratorium lifted upon approval.

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Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016.
2. Objections raised by the Municipal Corporation of Greater Mumbai (MCGM) regarding the Resolution Plan.
3. Compliance of the Resolution Plan with the provisions of the Insolvency and Bankruptcy Code, 2016 and related regulations.
4. Role and participation of MCGM in the Committee of Creditors (CoC) and their claims.
5. Implementation and monitoring of the Resolution Plan.

Issue-wise Analysis:

1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016:
The application IA No. 408/2019 was filed by the Resolution Professional seeking approval of the Resolution Plan. The Corporate Insolvency Resolution Process (CIRP) commenced on 13.03.2018, and the Resolution Professional (RP) was confirmed at the first CoC meeting on 12.04.2018. The CoC unanimously approved the Resolution Plan with 100% votes on 05.09.2018. The Resolution Plan includes writing off the issued and paid-up share capital, infusion of Rs. 1002.54 Crores, and priority payment of CIRP costs, liquidation value to Operational Creditors, and dissenting Financial Creditors.

2. Objections raised by the Municipal Corporation of Greater Mumbai (MCGM) regarding the Resolution Plan:
MCGM filed IA No. 207/2018 seeking to be declared as a Financial Creditor and Operational Creditor. They contended that the lease of land to the Corporate Debtor should be classified as a financial lease and that their claims for municipal taxes should be considered operational debt. MCGM also raised objections to the Resolution Plan, citing non-compliance with the Contract Agreement, failure to provide 20% of hospital beds, and non-payment of dues. MCGM argued that the lease agreement was not executed due to the Corporate Debtor's defaults, and thus, no leasehold rights existed. They sought the rejection of the Resolution Plan and liquidation of the Corporate Debtor.

3. Compliance of the Resolution Plan with the provisions of the Insolvency and Bankruptcy Code, 2016 and related regulations:
The Resolution Plan was found to meet the requirements of Section 30(2) of the I&B Code, 2016, and Regulations 37, 38, 38(1A), and 39(4) of the IBBI (CIRP) Regulations, 2016. The Resolution Plan provided for 78.07% payment to Financial Creditors and 75% payment to Operational Creditors, including doctors. The Resolution Applicant agreed to abide by the conditions stipulated by MCGM, and the plan's amount exceeded the liquidation value of the Corporate Debtor.

4. Role and participation of MCGM in the Committee of Creditors (CoC) and their claims:
MCGM participated in CoC meetings as a special invitee and had access to all information shared with CoC members. Despite their objections, MCGM had previously accepted the terms of the Resolution Plan subject to certain conditions. The RP argued that MCGM's claims and objections were inconsistent and contradictory. The Adjudicating Authority rejected MCGM's objections, stating that they were raised at a belated stage and were not tenable.

5. Implementation and monitoring of the Resolution Plan:
The Resolution Plan included provisions for the management and control of the Corporate Debtor, with a monitoring agency overseeing the implementation. The Resolution Applicant provided a financial guarantee and received a sanction letter from Yes Bank for the proposed loan. The Adjudicating Authority directed the Resolution Professional to be a member of the monitoring agency and file status reports. The plan was approved, binding on all stakeholders, and the moratorium ceased from the date of the order.

Conclusion:
The Adjudicating Authority approved the Resolution Plan, rejecting MCGM's objections and directing the implementation of the plan as per the provisions of the Insolvency and Bankruptcy Code, 2016. The Resolution Professional was tasked with ensuring compliance and reporting on the progress of the plan's implementation.

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