2021 (3) TMI 501 - Tri - Insolvency and Bankruptcy

Tribunal approves resolution plan by M/s. Akums Drugs, stakeholders bound, moratorium lifted.

The Tribunal approved the resolution plan submitted by M/s. Akums Drugs & Pharmaceuticals Ltd. The plan met the requirements under Sections 30(2) and ... Sanction of resolution plan - Section 31(1) of IBC Code - HELD THAT:- The requirements under Section 31(1) of the Code are satisfied in the present case. In para No.4 of Form H the RP has certified that the resolution plan complies with all the provisions of the Code and Regulations and does not contravene any of the provisions of the law for the time being in force. The RP has also certified that the resolution applicant namely Akums Drugs & Pharmaceuticals Ltd. has submitted affidavit pursuant to Section 30(1) of the Code confirming its eligibility under Section 29A of the Code to submit the resolution plan and the contents of the said affidavit are in order. The RP has submitted that the resolution plan has been approved by the CoC with 71.67% voting share in accordance with the provisions of the Code and CIRP Regulations made thereunder and after considering the feasibility and viability and other requirements specified by the CIRP Regulations. The resolution plan submitted by M/s. Akums Drugs & Pharmaceuticals Ltd. as approved by the CoC under Section 30 (4) of the Code is approved and the resolution plan so approved shall be binding on the corporate debtor and its employees, members, creditors including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan. Resolution plan approved - moratorium shall cease to have effect. Issues Involved:1. Approval of the resolution plan under Sections 30(6) and 31 of the Insolvency and Bankruptcy Code, 2016.2. Compliance with the provisions of the Insolvency and Bankruptcy Code, 2016, and related regulations.3. Distribution of voting shares among financial creditors.4. Treatment of claims and payments to operational and financial creditors.5. Implementation and supervision of the resolution plan.6. Objections and complaints regarding the resolution plan.Issue-Wise Detailed Analysis:1. Approval of the Resolution Plan:The resolution professional (RP) filed CA No. 389/2019 seeking approval of the resolution plan dated 13.03.2019, as restated on 07.05.2019, along with addendums dated 08.05.2019 and 16.05.2019. The plan was approved by the Committee of Creditors (CoC) with a 71.67% voting share during the tenth meeting held on 18.05.2019.2. Compliance with the Provisions of the Insolvency and Bankruptcy Code, 2016:The RP ensured compliance with Sections 30(6) and 31 of the Code and Regulation 39 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The resolution plan was verified to meet all necessary legal requirements, including the eligibility of the resolution applicant under Section 29A of the Code, as confirmed by the affidavit submitted by the resolution applicant.3. Distribution of Voting Shares Among Financial Creditors:The CoC was constituted with eight financial creditors, and the voting shares were distributed as follows:- JM Financial Asset Reconstruction Company Ltd.: 71.67% (voted for)- Union Bank of India: 7.16% (against)- Central Bank of India: 6.95% (against)- Bank of Baroda: 5.90% (against)- Export-Import Bank of India: 2.70% (against)- Canara Bank: 2.31% (against)- Small Industries Development Bank of India: 1.71% (abstained)- PEC Limited: 1.60% (against)4. Treatment of Claims and Payments to Operational and Financial Creditors:The resolution plan provided for the payment of insolvency resolution process costs in full and prioritized these payments over other debts. Operational creditors were to be paid in full, including statutory dues and claims of governmental authorities. The plan also detailed the payment structure for dissenting financial creditors, ensuring compliance with Section 30(2)(b) of the Code.5. Implementation and Supervision of the Resolution Plan:The resolution plan included provisions for the management and control of the corporate debtor's affairs post-approval. A Monitoring Committee comprising representatives from the CoC and the resolution applicant was to be constituted to oversee the implementation of the plan. The plan also outlined the infusion of additional capital for capital expenditure and working capital needs.6. Objections and Complaints Regarding the Resolution Plan:Objections were raised by dissenting financial creditors regarding the compliance of the plan with Section 30(2)(b) and Regulation 38(1)(b). However, the resolution professional and the resolution applicant argued that the amendments to these provisions were not applicable as they were made after the plan's approval by the CoC. The Tribunal rejected the objections, citing the Supreme Court's decision in Rahul Jain vs. Rave Scans Pvt. Ltd. and other relevant judgments.Conclusion:The Tribunal approved the resolution plan submitted by M/s. Akums Drugs & Pharmaceuticals Ltd., as it met the requirements under Sections 30(2) and 31(1) of the Code. The plan was binding on all stakeholders, including the corporate debtor, employees, members, creditors, and governmental authorities. The moratorium order ceased to have effect, and the RP was directed to forward all records to the Board for database recording. CA No. 389/2019 was disposed of accordingly.