2021 (10) TMI 1036 - Tri - Insolvency and Bankruptcy

Tribunal approves Resolution Plan for Fedders Electric following majority vote

The Tribunal approved the Resolution Plan submitted by IM+ Capitals Limited for Fedders Electric & Engineering Limited, as approved by the Committee ... Approval of Resolution Plan under Section 31 - Compliance with Section 30(2) and Regulation 38 - Committee of Creditors' approval by requisite majority under Section 30(4) - Eligibility of Resolution Applicant under Section 29A and Form-H certification - Monitoring Agency for implementation of the Resolution Plan - Binding effect of an approved Resolution Plan on stakeholders - Cessation of moratorium on approval of Resolution PlanCompliance with Section 30(2) and Regulation 38 - Approval of Resolution Plan under Section 31 - The Resolution Plan submitted by IM+ Capitals Limited complies with the requirements of Section 30(2) of the IBC and Regulation 38 of the CIRP Regulations and is approved under Section 31 of the Code. - HELD THAT: - The Resolution Professional examined the Resolution Plan and certified compliance with Section 30(2) read with Regulation 38. The Tribunal recorded that the plan provides for payment priorities, treatment of financial and operational creditors, includes required implementation and monitoring mechanisms, and does not contravene any law. On that basis, and having regard to the RP's certification, the Tribunal approved the Resolution Plan under Section 31(1). [Paras 15, 16, 18, 21]Resolution Plan of IM+ Capitals Limited is approved under Section 31 of the IBC as meeting the statutory requirements.Committee of Creditors' approval by requisite majority under Section 30(4) - Eligibility of Resolution Applicant under Section 29A and Form-H certification - The Committee of Creditors approved the Final Resolution Plan by the requisite voting share and the Resolution Applicant was certified eligible under Section 29A in Form-H. - HELD THAT: - The record shows e-voting was conducted and the Final Resolution Plan obtained 74.61% of the CoC voting share, satisfying the majority requirement of Section 30(4). The RP submitted a compliance certificate in Form-H certifying eligibility of the Successful Resolution Applicant under Section 29A and feasibility and viability of the plan. The Tribunal accepted these certifications as part of the statutory compliance necessary for approval. [Paras 12, 15, 16]CoC approval by 74.61% is valid and the Resolution Applicant is certified eligible; these certifications support the Tribunal's approval of the plan.Monitoring Agency for implementation of the Resolution Plan - Binding effect of an approved Resolution Plan on stakeholders - Cessation of moratorium on approval of Resolution Plan - A Monitoring Agency is appointed to supervise implementation; the approved Resolution Plan is declared binding on the corporate debtor and its stakeholders; and the moratorium under Section 14 ceases from the date of the order. - HELD THAT: - The Tribunal confirmed the Monitoring Agency composition as proposed by the CoC and permitted substitution of the Monitoring Agency with prior judicial approval if it fails to perform. Upon approval, the plan was declared binding on the corporate debtor, its members, employees, creditors and other stakeholders. Consequent to approval, the moratorium previously in force under Section 14 ceases to have effect from the date of the order. The Tribunal directed filing of records with the IBBI and made the plan effective from the date of the order. [Paras 21, 22, 23, 24, 25]Monitoring Agency appointed; approved Resolution Plan is binding on stakeholders; moratorium imposed under Section 14 ceases from the date of this order and the plan becomes effective forthwith.Final Conclusion: The Tribunal approved the Resolution Plan submitted by IM+ Capitals Limited as compliant with statutory requirements, accepted the CoC's 74.61% approval and the RP's certifications, appointed a Monitoring Agency for implementation, declared the plan binding on all stakeholders, directed filing of records with IBBI, and ordered that the moratorium under Section 14 shall cease from the date of this order. Issues Involved:1. Approval of the Resolution Plan.2. Compliance with IBC and CIRP Regulations.3. Evaluation and consideration of Resolution Plans by CoC.4. Liquidation consideration.5. Voting and approval process by CoC.6. Performance Bank Guarantee and financial arrangements.7. Monitoring and implementation of the Resolution Plan.Detailed Analysis:1. Approval of the Resolution Plan:The application was filed by the Resolution Professional (RP) under Sections 30(6) and 31 of the Insolvency and Bankruptcy Code (IBC), 2016, along with Regulation 39(4) of the CIRP Regulations, seeking approval of the Resolution Plan submitted by IM+ Capitals Limited for Fedders Electric & Engineering Limited ('Corporate Debtor'). The Resolution Plan, approved by the Committee of Creditors (CoC) with a 74.61% voting share, was placed on record.2. Compliance with IBC and CIRP Regulations:The RP verified and confirmed that the Resolution Plan complies with Section 30(2) of the IBC and Regulation 38 of the CIRP Regulations. The RP also submitted a compliance certificate in Form-H, certifying the eligibility of the Resolution Applicant under Section 29A of the Code and the feasibility and viability of the Resolution Plan.3. Evaluation and consideration of Resolution Plans by CoC:Initially, four Resolution Plans were submitted by different PRAs. After discussions and negotiations in multiple CoC meetings, only IM+ Capitals Limited's Resolution Plan was considered for approval. The CoC evaluated the plans based on the Request for Resolution Plan (RFRP) and the evaluation matrix. Shiva Consultants Private Limited's plan was rejected due to non-fulfillment of conditions laid down in the RFRP.4. Liquidation consideration:In the 24th CoC meeting, the possibility of liquidation was discussed due to uncertainty in the approval of the Resolution Plan. However, the CoC continued to negotiate and finalize the Resolution Plan with IM+ Capitals Limited.5. Voting and approval process by CoC:The final Resolution Plan was put up for e-voting by the CoC members, resulting in approval by 74.61% of the CoC. Some members, including Punjab National Bank, Central Bank of India, ICICI Bank, and Toyota Financial Services Pvt. Ltd., dissented. Despite the dissent, the Resolution Plan attained the requisite majority as stipulated under Section 30(4) of the IBC.6. Performance Bank Guarantee and financial arrangements:IM+ Capitals Limited submitted a performance bank guarantee of INR 9.65 crores. The Resolution Plan involved payment of INR 96.50 crores within 150 days from the approval date, sourced through internal resources and working capital.7. Monitoring and implementation of the Resolution Plan:A Monitoring Agency comprising representatives from the Financial Creditors, Successful Resolution Applicant, and the Resolution Professional was confirmed to supervise the implementation of the Resolution Plan. The Resolution Applicant was allowed to remove or substitute the Monitoring Agency with prior approval if necessary.Conclusion:The Tribunal approved the Resolution Plan under Section 31(1) of the IBC, declaring it binding on all stakeholders. The moratorium order ceased to have effect from the date of the order. The RP was directed to forward all CIRP records to the IBBI. The approved Resolution Plan became effective immediately, and the application was disposed of accordingly.