2021 (9) TMI 788 - Tri - Insolvency and Bankruptcy

Dev Land's Resolution Plan Approved by Creditors, Tribunal Rules on Operational Creditors' Rights

In Re : Charu Desai, Resolution Professional For Gb Global Ltd., Bank Of Baroda Versus Gb Global Ltd. (Formerly Mandhana Industries Ltd.)

The resolution plan submitted by Dev Land and Housing P. Ltd. (DLH) was approved by the Committee of Creditors (CoC) with a 67.01% voting share. The plan ... Seeking approval of the resolution plan - section 30(6) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- In view of the ruling of the apex court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA & OTHERS [2019 (11) TMI 731 - SUPREME COURT], the resolution applicant takes over the corporate debtor with all its assets and liabilities as specified in the resolution plan subject to orders passed herein. As already indicated the resolution plan has been approved by the CoC with 67.01 per cent. votes in its meeting held on December 31, 2020 - In the said case, the hon'ble apex court clearly laid down that the Adjudicating Authority would not have power to modify the resolution plan which the CoC in their commercial wisdom have approved. The instant resolution plan meets the requirements of section 30(2) of the Code and regulations 37, 38, 38(1A) and 39(4) of the Regulations. The resolution plan is not in contravention of any of the provisions of section 29A of the Code and is in accordance with law - Application allowed. Issues Involved:1. Approval of the resolution plan under section 30(6) of the Insolvency and Bankruptcy Code, 2016.2. Compliance with the Code and Regulations.3. Rights of operational creditors during the period under the former SRA.4. Furnishing and utilization of the performance bank guarantee.5. Utilization of fixed deposits of the former SRA.6. Reliefs and concessions sought by the resolution applicant.7. Implementation and supervision of the resolution plan.Detailed Analysis:1. Approval of the Resolution Plan:The application, under section 30(6) of the Insolvency and Bankruptcy Code, 2016, seeks approval for the resolution plan submitted by Dev Land and Housing P. Ltd. (DLH). The corporate insolvency resolution process (CIRP) was initiated on September 29, 2017. The resolution plan submitted by Formation Textiles LLC (FTL) was initially approved but not implemented, leading to a restoration of CIRP and fresh resolution plans being invited. The resolution plan from DLH was received, reviewed, and approved by the Committee of Creditors (CoC) with 67.01% voting share.2. Compliance with the Code and Regulations:The resolution plan meets the requirements of section 30(2) of the Code, providing for priority payment of CIRP costs, payment of debts to operational and dissenting financial creditors, and management of the corporate debtor's affairs post-approval. The plan also complies with regulation 38 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, ensuring operational creditors' payments in priority over financial creditors and addressing the interests of all stakeholders.3. Rights of Operational Creditors:During the period under the former SRA (FTL), liabilities towards operational creditors amounting to Rs. 22.53 crores were created, with only Rs. 1.63 crores provided under the current resolution plan. The Tribunal ruled that the rights of these creditors cannot be decided by the CoC without hearing the affected parties, and this issue should be addressed in an appropriate proceeding. However, the new RA (DLH) is not accountable for this liability.4. Furnishing and Utilization of Performance Bank Guarantee (PBG):The CoC, in its commercial wisdom, permitted the SRA to take back the PBG immediately upon the approval of the resolution plan by the Tribunal, despite this being a deviation from the RFRP requirements. The Tribunal did not interfere with this decision.5. Utilization of Fixed Deposits of Former SRA:The former SRA infused Rs. 42.99 crores into the corporate debtor, kept as a fixed deposit with Bank of Baroda. The Tribunal directed that these fixed deposits be retained intact and abide by orders passed by the Authority as necessary.6. Reliefs and Concessions:The SRA sought general reliefs, concessions, and dispensations. The Tribunal indicated that the Monitoring Committee or the new management may approach respective authorities for such reliefs, which should be considered favorably under the law.7. Implementation and Supervision of the Resolution Plan:The resolution plan includes the formation of a Monitoring Committee comprising representatives of the SRA, financial creditors, and a textile expert, which will oversee the implementation until the discharge date. The plan also outlines the payment timelines and sources of funds, including upfront equity infusion and unsecured loans.Order:1. The resolution plan submitted by Dev Land and Housing P. Ltd. is approved and binding on all stakeholders.2. The corporate debtor must approach authorities for renewal of permits and benefits.3. The Monitoring Committee or new management may seek reliefs and concessions from respective authorities.4. The memorandum and articles of association shall be amended accordingly.5. No erstwhile creditors can claim anything beyond the liabilities taken over by the resolution applicant.6. The moratorium under section 14 of the Code ceases to have effect.7. The Monitoring Committee shall supervise the implementation and file status reports quarterly.8. The applicant shall forward all records to the IBBI and send a certified copy of the order to the CoC and the resolution applicant.