2019 (12) TMI 1137 - Tri - Insolvency and Bankruptcy

Tribunal Approves Resolution Plan under Insolvency Code: Compliance, Stakeholder Benefits

The Tribunal approved the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, finding it compliant with Section 30(2) requirements and ... CIRP proceedings - approval of resolution plan - HELD THAT:- As regards compliance of clause (b) of Section 30(2) of the Code, the Resolution Professional has certified that clauses 6.3 and 6.4 of the resolution plan provide for the payment of the debts of operational creditors in such manner as may be specified by the Board which shall not be less than the amount to be paid to the operational creditors in the event of a liquidation of the corporate debtor under Section 53. - it is seen that clause (b) of sub-section (2) of Section 30 of the Code stands satisfied. It is pertinent to state here that Section 29A of the Code prescribes certain eligibility criteria and disqualifications for persons who submit a resolution plan. Resolution applicant has given adequate declaration and undertaking on their eligibility to submit the Resolution Plan. Resolution Professional has also confirmed that the Resolution Applicant M/s. Ajay Yadav & Co. through its SVP Umaiza Infracon LLP has submitted affidavit in this regard and are eligible to submit resolution plan and does not fall under any of the category as mentioned in Section 29A of the Code - Regulation 36B(4A) of the CIRP Regulations requires that the Resolution Applicant shall provide a performance security. Resolution professional has certified that the Resolution Applicant has submitted Performance Guarantee of ₹ 44 Crores issued by AU Small Finance Bank Limited in compliance of Regulation 36B(4A) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - we are satisfied that all the requirements of Section 30(2) are fulfilled and no provision of the law for the time being in force appears to have been contravened. The requirements as per the Code and regulations have been complied with. Moreover, the Resolution Plan has been unanimously approved by 100% voting share of the members of CoC and has been submitted in compliance of Section 30 of the Code for approval. In view of the aforesaid discussions and as no infirmity have been brought out upon screening of the Resolution Plan; we hereby approve the Resolution Plan under sub-section (1) of Section 31 of the Code Issues Involved:1. Approval of the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016.2. Compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016.3. Evaluation of the Resolution Plan by the Committee of Creditors (CoC).4. Appointment and role of the Monitoring Committee.5. Reliefs and concessions sought in the Resolution Plan.6. Compliance with applicable laws.Detailed Analysis:1. Approval of the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016:The application was filed by the Resolution Professional seeking approval of the Resolution Plan under Section 31 of the Code read with Regulation 39 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of Corporate Persons) Regulations, 2016. The Tribunal highlighted that Section 31 mandates the Adjudicating Authority to ensure that the Resolution Plan meets the requirements of Section 30(2) of the Code and has provisions for its effective implementation. The Tribunal approved the Resolution Plan under Section 31(1) of the Code, confirming that it shall be binding on the corporate debtor and all stakeholders involved.2. Compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016:The Tribunal examined whether the Resolution Plan complied with the conditions set out in Section 30(2) of the Code. The Resolution Professional confirmed that the plan met all the requirements, including:- Payment of insolvency resolution process costs (Section 30(2)(a)).- Payment of debts of operational creditors (Section 30(2)(b)).- Management of the corporate debtor's affairs post-approval (Section 30(2)(c)).- Implementation and supervision of the plan (Section 30(2)(d)).- Compliance with applicable laws (Section 30(2)(e) and (f)).3. Evaluation of the Resolution Plan by the Committee of Creditors (CoC):The CoC, comprising nine financial creditors, evaluated the Resolution Plan submitted by Ajay Yadav & Co. through its SPV Umaiza Infracon LLP. The plan was unanimously approved by the CoC with a 100% voting share. The Tribunal emphasized that the commercial wisdom of the CoC is paramount and not subject to judicial review unless it contravenes the law or public interest. The CoC's decision was found to be reasoned and compliant with the Code and CIRP Regulations.4. Appointment and role of the Monitoring Committee:The Tribunal approved the appointment of a Monitoring Committee to oversee the implementation of the Resolution Plan. The committee will include a representative of the CoC/financial creditors, the resolution professional as an insolvency professional, and a representative of the resolution applicant, chaired by the IP. The Resolution Professional will be a member for at least three months. The Monitoring Committee is granted liberty to seek further directions from the Tribunal if necessary.5. Reliefs and concessions sought in the Resolution Plan:The Tribunal noted that some reliefs and concessions sought in the Resolution Plan were beyond its jurisdiction. The Monitoring Committee, along with the Resolution Applicant, can make such claims before the relevant authorities, which will consider them in accordance with the law.6. Compliance with applicable laws:The Tribunal reiterated that the Resolution Plan must comply with all applicable laws. The resolution applicant is required to obtain necessary approvals within one year from the date of the order or within the period provided by law, whichever is later. The Resolution Applicant has undertaken that the plan does not contravene any provisions of applicable laws.Conclusion:The Tribunal concluded that the Resolution Plan met all statutory requirements and was approved unanimously by the CoC. The plan's approval is advantageous to all stakeholders, ensuring the corporate debtor continues as a going concern. The moratorium order ceased to have effect from the date of the order, and the Resolution Professional was directed to forward all records to the Insolvency and Bankruptcy Board of India (IBBI). The approved Resolution Plan became effective immediately upon passing the order.