Tribunal Approves Revised Resolution Plan, Dismisses Liquidation Application

The Tribunal approved the revised resolution plan submitted by M/s. Taguda Pte Ltd., dismissing the liquidation application and directing reconsideration by stakeholders. The plan included a committed payment of INR 227 crores, with detailed timelines for creditor payments and conversion of debt into preference shares. An Interim Monitoring Agency was established to oversee plan implementation. The Tribunal granted reliefs in line with a Supreme Court judgment, ensuring compliance with mandatory resolution plan contents under Section 30(2) of the IBC. Stakeholders were bound by the approved plan, with the Resolution Professional discharged, and the Resolution Applicant tasked with supervision.

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Issues Involved:
1. Filing of application for liquidation of the Corporate Debtor.
2. Approval of the revised resolution plan.
3. Objections to the liquidation application.
4. Proceedings before the Hon’ble NCLAT.
5. Financial proposals and payments to creditors.
6. Management and supervision of the implementation of the resolution plan.
7. Reliefs, concessions, and dispensations sought by the Resolution Applicant.
8. Compliance with mandatory contents of the resolution plan under Section 30(2) of the IBC.

Detailed Analysis:

1. Filing of Application for Liquidation of the Corporate Debtor:
The Corporate Debtor was admitted into CIRP on 14.05.2018. The CoC was constituted on 06.06.2018. Despite several attempts to invite resolution plans, the CoC did not receive any viable resolution plan and thus, decided to file for liquidation under Section 33 of the Code. The application for liquidation was filed after the resolution plan was rejected by a 77.61% majority.

2. Approval of the Revised Resolution Plan:
The revised resolution plan was submitted by M/s. Taguda Pte Ltd. and approved by the CoC with a 91.06% majority. The plan included a committed payment of INR 227 crores, with INR 225.14 crores allocated for the settlement of Financial Creditors, CIRP Costs, employee & workmen dues, Operational Creditors, and statutory liabilities. The plan also proposed converting unpaid debt into non-convertible redeemable preference shares.

3. Objections to the Liquidation Application:
The Resolution Applicant objected to the liquidation application, arguing that the CoC erred in rejecting the resolution plan. The Tribunal dismissed the liquidation application and approved the resolution plan suo moto.

4. Proceedings before the Hon’ble NCLAT:
The State Bank of India, as the lead member of the CoC, filed an appeal before the NCLAT, which stayed the implementation of the Tribunal's order and directed reconsideration of the revised resolution plan. The NCLAT granted six weeks for stakeholders to consider the revised plan, which was later extended.

5. Financial Proposals and Payments to Creditors:
The resolution plan proposed detailed timelines and amounts for payments to Financial Creditors, Operational Creditors, and statutory liabilities. Key features included:
- Upfront cash payment of INR 48.14 crores on the closing date.
- Additional payments of INR 50 crores each on the 30th, 60th, and 90th days from the closing date.
- Final tranche of INR 27 crores on the 120th day from the closing date.
- Conversion of residual debt into non-convertible redeemable preference shares.

6. Management and Supervision of the Implementation of the Resolution Plan:
The resolution plan provided for the constitution of an Interim Monitoring Agency (IMA) comprising four members (two from the Resolution Applicant and two from the CoC) to supervise the implementation of the plan and manage the company's operations.

7. Reliefs, Concessions, and Dispensations Sought by the Resolution Applicant:
The Tribunal granted reliefs and concessions as per the Supreme Court judgment in Ghanshyam Mishra & Sons Vs Edelweiss Asset Reconstruction Company limited, extinguishing past liabilities not part of the resolution plan. However, statutory obligations/liabilities were not waived and would be dealt with by the appropriate authorities.

8. Compliance with Mandatory Contents of the Resolution Plan under Section 30(2) of the IBC:
The resolution plan complied with Section 30(2) of the IBC, including:
- Payment of CIRP Costs in full.
- Payment of debts to Operational Creditors in priority over Financial Creditors.
- Payment to dissenting Financial Creditors in priority.
- Management and control of the company's affairs post-approval.
- Implementation schedule and term of the resolution plan.

Conclusion:
The Tribunal approved the resolution plan, binding on all stakeholders, and discharged the Resolution Professional from duties. The plan's implementation would be supervised by the Resolution Applicant, with quarterly status reports to the Tribunal. The moratorium under Section 14 ceased, and the Resolution Applicant was granted access to the Corporate Debtor's records and premises. Non-compliance or withdrawal of the resolution plan would result in forfeiture of the performance security amount.

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