2020 (4) TMI 447 - Tri - Insolvency and Bankruptcy

Vaibhav Buildtech's Plan Approved by Creditors, Court Ends Moratorium Order

Durga Enterprises Versus SRS Meditech Ltd.

Durga Enterprises Versus SRS Meditech Ltd. - TMI Issues Involved:1. Approval of the resolution plan under Section 31 of the Insolvency and Bankruptcy Code, 2016.2. Compliance with the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.3. Constitution and functioning of the Committee of Creditors (CoC).4. Valuation and liquidation value determination.5. Compliance with Section 30(2) of the Insolvency and Bankruptcy Code.6. Implementation and monitoring of the resolution plan.7. Distribution of funds and settlement of claims.8. Performance security compliance under Regulation 39(4) and 36B(4A).Detailed Analysis:1. Approval of the Resolution Plan:The application was filed by the Resolution Professional (RP) under Section 31 of the Insolvency and Bankruptcy Code, 2016, seeking sanction of the resolution plan approved by the CoC. The plan was approved by 93% of the CoC members, satisfying the requirement of Section 30(4) of the Code.2. Compliance with Regulations:The RP issued a public announcement for claims from creditors as per Regulation 6 and constituted the CoC in accordance with Section 21. Two registered valuers were appointed to determine the fair and liquidation values of the corporate debtor, as per Regulation 35. The RP also complied with Regulation 36(A) by inviting expressions of interest (EOI) and publishing Form G.3. Constitution and Functioning of CoC:Initially, the CoC consisted of seven financial creditors, which was later reconstituted to include ten creditors. The CoC approved the eligibility criteria for resolution applicants and the evaluation matrix. The RP received EOIs from four prospective applicants and extended the submission deadlines for resolution plans multiple times to ensure thorough verification.4. Valuation and Liquidation Value Determination:The fair and liquidation values were determined by two valuers, averaging Rs. 192.71 lacs and Rs. 135.09 lacs, respectively. These values were presented to the CoC along with the resolution plan.5. Compliance with Section 30(2):The resolution plan provided for:- Full payment of CIRP costs in priority.- Payment to operational creditors and dissenting unsecured financial creditors in compliance with Section 30(2)(b).- Management and supervision of the corporate debtor post-approval.- Compliance with all provisions of the Code and Regulations, as certified by the RP.- The plan did not contravene any existing laws.6. Implementation and Monitoring:An Implementation and Monitoring Committee was proposed, comprising the RP, an Assistant General Manager from SBI, and a technical expert. The plan included a detailed implementation schedule and provisions for effective supervision.7. Distribution of Funds and Settlement of Claims:The resolution plan detailed the distribution of funds:- Rs. 3.50 crore to secured financial creditors.- Rs. 1.25 crore for employees and workmen.- Rs.0.75 crore for CIRP costs.- Rs.0.25 crore for unsecured financial creditors.- Rs.0.35 crore for operational creditors.8. Performance Security Compliance:The RP filed an affidavit confirming the transfer of Rs. 30 lakh (5% of the cash contribution) to the corporate debtor's account, complying with Regulation 36B(4A) and 39(4).Conclusion:The resolution plan submitted by Vaibhav Buildtech Private Limited was approved by the CoC with a 93% voting share. The plan met all requirements under Section 30(2) and 31(1) of the Code, including provisions for effective implementation and compliance with relevant regulations. The moratorium order ceased to have effect, and the RP was directed to forward all records to the Board. The application (CA No. 704/2019) was disposed of accordingly.