2020 (4) TMI 351 - AT - Insolvency and Bankruptcy

NCLAT allows Resolution Plans implementation, settles creditors' claims, hands control to Liberty House Group.

Liberty House Group Pte. Ltd. Versus State Bank of India & Ors. And (Vice-Versa)

Liberty House Group Pte. Ltd. Versus State Bank of India & Ors. And (Vice-Versa) - [2021] 225 Comp Cas 653 (NCLAT–Del) Issues Involved:1. Approval and implementation of Resolution Plans for M/s. Adhunik Metaliks Limited and M/s. Zion Steel Limited.2. Non-compliance and subsequent grievances raised by Liberty House Group Pte. Ltd.3. Re-initiation of Corporate Insolvency Resolution Process (CIRP) and liquidation orders.4. Adjustment and forfeiture of deposited amounts.5. Final settlement and compliance with the Resolution Plans.6. Corporate Insolvency Resolution Process costs and claims of Operational Creditors.Detailed Analysis:1. Approval and Implementation of Resolution Plans:The State Bank of India filed applications under Section 7 of the Insolvency and Bankruptcy Code, 2016 against M/s. Adhunik Metaliks Limited and its subsidiary, M/s. Zion Steel Limited. Liberty House Group Pte. Ltd. submitted Resolution Plans for both companies, which were approved by the National Company Law Tribunal (NCLT), Kolkata Bench on 17th July 2018 and 10th July 2018, respectively. The Committee of Creditors (CoC) approved these plans with 99.94% and 100% voting shares.2. Non-compliance and Subsequent Grievances:Liberty House Group Pte. Ltd. did not implement the approved plans, citing non-compliance by the CoC with certain agreements. They initially approached the NCLT, which rejected their claims, leading to appeals before the National Company Law Appellate Tribunal (NCLAT).3. Re-initiation of CIRP and Liquidation Orders:Due to the failure of Liberty House Group Pte. Ltd. to make the upfront payment within the extended 30 days, the CoC requested re-initiation of the CIRP and consideration of other Resolution Plans. The NCLT, by its order dated 9th July 2019, rejected the CoC's request and ordered liquidation of both companies.4. Adjustment and Forfeiture of Deposited Amounts:Liberty House Group Pte. Ltd. proposed that Rs. 50 Crores already deposited be adjusted against the upfront payment, whereas the CoC sought forfeiture of the amount. The NCLT rejected the CoC's submission, leading to appeals by the State Bank of India and Liberty House Group Pte. Ltd.5. Final Settlement and Compliance with the Resolution Plans:During the pendency of the appeals, the matter was discussed and settled. On 22nd January 2020, the NCLAT allowed Liberty House Group Pte. Ltd. to comply with the Resolution Plans by depositing the remaining amounts. The NCLAT directed Liberty House to deposit Rs. 360 Crores for Adhunik and Rs. 10 Crores for Zion, along with an additional Rs. 10 Crores as a goodwill gesture by 14th February 2020. The liquidation orders were stayed, and the Liquidator was directed to function as the Resolution Professional.6. Corporate Insolvency Resolution Process Costs and Claims of Operational Creditors:The NCLAT noted that the Corporate Insolvency Resolution Process costs for Adhunik had been partly paid. An intervenor, IFGL Refractories Limited, claimed that its dues as an Operational Creditor had not been paid. However, the NCLAT declined to address these issues, as they were not raised during the initial approval of the Resolution Plans.Final Judgment:The NCLAT set aside the liquidation orders, allowing the implementation of the Resolution Plans in their entirety. The claims of all creditors were deemed settled, and the control and records of both companies were handed over to Liberty House Group Pte. Ltd. The CoC, Monitoring Committee, and Resolution Professional were discharged from their duties. The NCLAT directed the Insolvency and Bankruptcy Board of India (IBBI) to withdraw any complaints filed before the Special Judge. The appeals by Liberty House Group Pte. Ltd. were allowed, and the appeal by the State Bank of India was disposed of.