Resolution plan approved under Section 60(5)(c) with debt extinguishment and tax exemptions for corporate debtor

The NCLT Hyderabad Bench approved a resolution plan under Section 60(5)(c) of the Insolvency and Bankruptcy Rules, 2016. The tribunal directed cancellation of existing equity and preference shares, issuance of new shares worth INR 10 lacs to the successful bidder, and permitted structuring of balance amount through convertible instruments. All financial creditor claims, operational creditor liabilities, and statutory dues prior to transfer date were permanently extinguished. The corporate debtor and bidder were exempted from taxation liabilities, litigation consequences, and penalty charges relating to pre-transfer period. The petition was allowed in part.

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Issues Involved:
1. Capital Structure Related/Share Issuance/ROC Related
2. Financial Creditors' Claims Related
3. Operational Creditors
4. Legal/Litigations
5. Taxation
6. General Reliefs

Issue-wise Detailed Analysis:

1. Capital Structure Related/Share Issuance/ROC Related:
The Applicant sought directions for the cancellation of existing equity and preference shares of the Corporate Debtor without further actions, issuance of new shares worth INR 10,00,000 to Innopark (India) Private Limited and its nominees, and the structuring of the balance amount through various financial instruments. Additionally, the Applicant requested the extinguishment of past liabilities, penalties, and fees related to non-compliance with the Companies Act up to the Transfer Date. The court granted these requests.

2. Financial Creditors' Claims Related:
The Applicant requested the extinguishment of all accrued or unpaid interest, claims, fees, commissions, and charges related to the financial debt of the Corporate Debtor up to the Transfer Date. They also sought the release of charges over all assets of the Corporate Debtor upon payment of the Consideration and the upgrade of the Corporate Debtor's account to "Standard Category" from NPA. The court granted these requests, including the issuance of No-objection Certificates for charge satisfaction and regularization of accounts.

3. Operational Creditors:
The Applicant sought the settlement of liabilities towards Operational Creditors/Statutory Dues upon distribution of proceeds under Section 53 of the IBC, extinguishment of demands, interest, and penalty charges up to the Transfer Date, and waiver of past, present, or future claims related to operational creditors, intercorporate loans, and non-convertible debentures. The court granted these requests.

4. Legal/Litigations:
The Applicant requested that the Corporate Debtor's liability for offenses committed before the issuance of the Sale Certificate under the liquidation process cease and that no action be taken against the Corporate Debtor's property for such offenses. They also sought the cessation of liabilities, litigations, and proceedings related to the period before the Transfer Date. The court granted these requests.

5. Taxation:
The Applicant sought exemption from all taxes, levies, fees, transfer charges, and other such levies arising from or related to the Acquisition. They requested the completion and closure of all tax assessments, proceedings, and demands for periods prior to the Transfer Date and the waiver of any tax liabilities. The court directed the Applicant to approach the concerned authorities for decisions as per prevailing law, rules, and regulations.

6. General Reliefs:
The Applicant sought directions to ensure that no consents, licenses, approvals, rights, entitlements, benefits, and privileges granted to the Corporate Debtor be terminated due to the initiation of insolvency/liquidation or change of control. They also requested the continuation of existing consents and licenses and the availability of additional licenses and consents required for running the business as a going concern. The court granted these requests, ensuring the rights of the Corporate Debtor to recover amounts due from other creditors.

Conclusion:
The court partly allowed the application, granting most of the reliefs and directions sought by the Applicant, with specific directions for the Applicant to approach concerned authorities regarding taxation issues. The application was disposed of accordingly.

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