Swastic Aqua Limited's Resolution Plan Approved under Insolvency & Bankruptcy Code

The Resolution Plan for Swastic Aqua Limited was approved under Section 30(6) of the Insolvency & Bankruptcy Code, 2016, by the Adjudicating Authority. Compliance with Section 30(2) of the Code, CIRP Regulations 38 and 39, effective implementation and supervision provisions, and adherence to applicable laws were confirmed. The plan, approved by the Committee of Creditors with 100% voting, met all requirements, leading to the cessation of the moratorium order and direction to transfer records to the Insolvency and Bankruptcy Board of India. The approved plan became effective immediately.

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Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016.
2. Compliance with the provisions of Section 30(2) of the Insolvency & Bankruptcy Code, 2016.
3. Compliance with Regulation 38 and 39 of the CIRP Regulations.
4. Effective implementation and supervision of the Resolution Plan.
5. Adherence to applicable laws under the Resolution Plan.

Detailed Analysis:

1. Approval of the Resolution Plan under Section 30(6) of the Insolvency & Bankruptcy Code, 2016:
The petition was filed by the Resolution Professional (RP) seeking approval of the Resolution Plan for Swastic Aqua Limited. The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor (CD) on 9-12-2019. The RP conducted public announcements, collated claims, and constituted a Committee of Creditors (CoC) with a sole Financial Creditor (FC). Various meetings were held, and Expressions of Interest (EOI) were invited and evaluated. Due to the Covid-19 pandemic, the timeline for submission of resolution plans was extended. The CoC approved the resolution plan submitted by Mr. Binod Sarawgi and Mrs. Vrinda Sarawgi with 100% voting. The RP filed the present application on 29-8-2020 seeking approval of the plan.

2. Compliance with the provisions of Section 30(2) of the Insolvency & Bankruptcy Code, 2016:
The Adjudicating Authority (AA) examined the compliance of the Resolution Plan with Section 30(2) of the Code, which mandates that the plan:
- Provides for the payment of insolvency resolution process costs in priority to other debts.
- Ensures the payment of debts of operational creditors not less than the amount in the event of liquidation.
- Provides for the management of the affairs of the CD post-approval.
- Includes provisions for the implementation and supervision of the plan.
- Does not contravene any existing laws and meets other specified requirements.

The RP certified that the plan met these requirements, including the payment of CIRP costs (clause 6.1) and the debts of operational creditors (clause 6.3.2).

3. Compliance with Regulation 38 and 39 of the CIRP Regulations:
Regulation 38 mandates that the resolution plan should prioritize payments to operational creditors over financial creditors and include a statement on how it deals with the interests of all stakeholders. It should also provide for the term of the plan, its implementation schedule, management, and control of the business, and adequate means for supervision. Regulation 39 requires the RP to file a compliance certificate in Form-H. The RP confirmed compliance with these regulations, and the AA found the plan to be in order.

4. Effective implementation and supervision of the Resolution Plan:
The plan included provisions for a Monitoring Committee (clauses 23 and 18.1) to oversee the implementation and supervision of the plan. This committee would consist of CoC members and RA nominees, and would appoint the RP to manage the day-to-day affairs until the full handover of assets and business records.

5. Adherence to applicable laws under the Resolution Plan:
Section 30(2)(f) of the Code requires that the resolution plan should not contravene any existing laws. The AA emphasized that the resolution applicant must adhere to all applicable laws under the proposed plan, whether or not specifically provided therein. The RP attached a statement of compliance at Schedule 5 of the Resolution Plan, confirming adherence to legal requirements.

Conclusion:
The AA was satisfied that the Resolution Plan met all the requirements of Section 30(2) and complied with CIRP Regulations 38 and 39. The plan was found to have sufficient provisions for its effective implementation. Consequently, the AA approved the Resolution Plan, which was earlier approved by the CoC with a 100% vote. The moratorium order ceased to have effect from the date of the order, and the RP was directed to forward all records to the Insolvency and Bankruptcy Board of India (IBBI). The approved Resolution Plan became effective from the date of the order, and copies of the order were to be served to the parties.

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