2021 (5) TMI 65 - Tri - Insolvency and Bankruptcy

Tribunal orders RP to review resolution plan for fair assessment, maximizing asset value and protecting stakeholders

The Tribunal directed the Resolution Professional (RP) to reconsider the Applicant's resolution plan before the Committee of Creditors (CoC) to ensure a ... Seeking directions of this Tribunal to direct the Respondent (RP) to allow the participation of the Applicant to introduce the Resolution Plan in the CIRP process of the Corporate Debtor - Section 60(5) of the IBC - HELD THAT:- The CoC has not considered the proposal submitted by the Applicant in toto but has rejected the resolution plan of the Applicant on technical grounds. The apprehension of the Applicant is that the RP is supporting the plan of the single Resolution Plan received earlier and has taken all steps to see that the overall plan was not seen by the CoC. The idea of giving an opportunity to the Applicant to submit his plan by paying the double amount of EMD is to maximize the value of the assets of the Corporate Debtor company as per the intentions of the IBC, 2016. Obviously this has not happened. This Tribunal disposes of this application with directions to the RP to place the overall Resolution Plan of the Applicant before the CoC once again for its informed decision on this issue keeping in view the objectives of the IBC, 2016. Issues Involved:1. Applicant's request to submit a resolution plan for the Corporate Debtor.2. Timeliness and validity of the Applicant's Expression of Interest (EOI).3. Resolution Professional's (RP) refusal to accept the Applicant's EOI.4. Allegations of collusion and bias by the RP.5. Compliance with the Insolvency and Bankruptcy Code (IBC), 2016 and related regulations.Issue-wise Detailed Analysis:1. Applicant's Request to Submit a Resolution Plan:The Applicant sought urgent directions from the Tribunal to allow participation in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor, citing their past experiences, passion, and unique approach as factors making them a suitable applicant. The Applicant emphasized their credibility and market image, and the impact of the COVID-19 pandemic on their ability to submit the EOI within the stipulated time. The Applicant argued that their resolution plan would maximize the value of the Corporate Debtor's assets and benefit all creditors.2. Timeliness and Validity of the Applicant's EOI:The RP had issued an advertisement for the submission of EOI with a deadline of 06.10.2020. The Applicant submitted their interest via email on 02.12.2020, which included a Demand Draft (DD) of Rs. 50,00,000 and a net worth certificate showing a net worth of Rs. 45 crores. Despite this, the RP refused to accept the EOI, citing it was received 57 days late. The RP also questioned how the Applicant knew the criteria for filing the EOI, suggesting the Applicant was ill-informed about the process and timelines.3. Resolution Professional's Refusal to Accept the Applicant's EOI:The RP argued that the Applicant's claim of being unable to submit the EOI on time due to pandemic-related movement restrictions was false, supported by social media evidence showing the Applicant's free movement during the relevant period. The RP also highlighted the Applicant's failure to provide all required documents despite multiple requests, which hindered the evaluation of their technical bid. The RP's verification attempts with the bank and the CA who issued the net worth certificate were unsuccessful, leading to doubts about the Applicant's liquidity and source of funds.4. Allegations of Collusion and Bias by the RP:The Applicant alleged that the RP was acting in collusion with the existing resolution applicant, attempting to sabotage the Applicant's efforts by finding faults in their documents and violating Tribunal orders. The RP was accused of threatening the Applicant's auditor and bank manager, and of trying to prejudice the Tribunal by presenting social media evidence. The Applicant argued that the RP's actions were aimed at ensuring the existing resolution applicant's plan was accepted, potentially at a lower value than the liquidation value.5. Compliance with the IBC, 2016 and Related Regulations:The Tribunal noted that the CoC did not consider the Applicant's proposal in its entirety but rejected it on technical grounds. The Tribunal emphasized the objective of the IBC, 2016, which is to maximize the value of the Corporate Debtor's assets. The Tribunal had earlier directed the RP to place the Applicant's proposal before the CoC, which was not adequately done. The Tribunal found that the RP's actions did not align with the IBC's intentions.Conclusion:The Tribunal directed the RP to place the Applicant's resolution plan before the CoC once again for an informed decision, keeping in view the objectives of the IBC, 2016. This decision aims to ensure that the value of the Corporate Debtor's assets is maximized, and the interests of all stakeholders are considered.