TaxTMI 
TaxTMI 
2019 (6) TMI 1152
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.... resolution plan has been approved by the Committee of Creditors (CoC). CA No.339/2018 for sanction of the plan has been filed by the resolution professional. 2. The CA No.477/2018 is filed by Shri Rajit Mehra, ex-Director of the corporate debtor under Section 60(5) and other applicable provisions of the Code for impleadment as respondent/objector in CA No.339/2018 filed by the Resolution Professional for approval of resolution plan (supra) and for placing on record the objections of the ex-Director to the resolution plan purportedly approved in the meeting of CoC held on 30.06.2018. 3. Learned counsel for the applicant has pleaded that he is entitled to attend the meeting of CoC and is a shareholder of the corporate debtor and therefore, his application for impleadment as respondent/objector be accepted. 4. We have carefully considered the submissions of the learned counsel for the applicant at the preliminary stage and have also perused the record. We find that as per Section 24 of the Code, the ex-Director is entitled to attend the meeting of CoC but has no right to vote in the decision of the CoC. The perusal of the minutes of the ten meetings of the CoC show that it was onl....
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....itors of the corporate debtor as envisaged in the Code. 3. It is submitted that in pursuance of the public announcement, claims were received from the financial as well as operational creditors, which were verified and after collation, the IRP constituted the CoC as per the provisions of Section 21 of the Code. It is stated that initially, the CoC was constituted with two financial creditors i.e. Punjab National Bank having a voting share of 62.4% and Oriental Bank of Commerce having a voting share of 37.6% and later on, Kotak Mahindra Bank also filed their claim as one of the financial creditors which was approved by the RP, in view of unamended Regulation 12 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 on 29.06.2018 with 0.86% voting share and constitution of the Committee of Creditors and their voting share was amended accordingly and intimation in this regard was intimated to this Tribunal vide diary No.2703 dated 04.07.2018. After accepting the claims of Kotak Mahindra Bank the changed voting share of the financial creditors is Punjab National Bank 61.86%, Oriental Bank of Commerce 37.28% and Kotak Mahindra Bank having 0.86%. It is submi....
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....h the approval of CoC in their fifth meeting held on 04.05.2018 and the revised evaluation matrix was duly shared with the prospective resolution applicants as per Regulation 36 (A) of the Regulations. 9. It is submitted that all the resolution plans were opened in front of the CoC in the sixth meeting held on 14.05.2018 and it was resolved to defer the approval of resolution plan for further evaluation. 10. It is stated that in seventh meeting of CoC held on 05.06.2018 an agenda was put forward for adoption of Swiss Challenge Method for maximisation of the value of CIRP process and in the eighth meeting of CoC held on 12.06.2018, CoC resolved to decline the Swiss Challenge Method but in the ninth meeting of CoC held on 25.06.2018, they reconsidered their earlier decision and all members of the CoC resolved to adopt the Swiss Challenge Method for maximisation of the CIRP value and also resolved that in accordance with the Swiss Challenge Method, the H2 and H3 bidders would be given one final opportunity to make a revised/final/binding bid in their resolution plans by 27.06.2018 and if this revised/final/binding bid so received exceeded the financial bid of H1 bidder, H1 bidder wo....
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....resent themselves, an application for intervention may be filed which shall be disposed of on its own merits. Notice of the application was, however, directed to be issued to the resolution applicant and the RP was also required to file certificate to the effect that the contents of the resolution plan fulfil all the requirements of the Code and the Regulations and that the Resolution Plan stands duly approved by the CoC. The RP was also directed to file compliance certificate in Form H. 14. Vide diary No.3415 dated 10.09.2018, the copy of certificate/undertaking that the contents of the resolution plan fulfil all the requirements of the Code and Regulations and that the resolution plan stands duly approved by the CoC was filed as Annexure A-2 and copy of the Form H was filed as Annexure A-3. During the course of hearing on 11.09.2018, the compliance affidavit was taken on record and the application was directed to be listed on 15.10.2018. 15. CA No.399 of 2018 was filed by the financial creditor Punjab National Bank for preponing the date of 15.10.2018 on the ground that the period of time after the rainy season is very much crucial for the resolution applicant to install the re....
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....to be vested with the State Government; no care has been taken for the dues of operational creditors and statutory dues. 18. During the course of the hearing, the learned Senior Counsel for the resolution applicant stated on instructions that the resolution applicant undertakes to abide by any of the directions/judgements/orders/interim orders or otherwise subject to right to challenge these orders in respect of the assets/properties of the corporate debtor unconditionally and the undertaking was taken on record. It was also submitted that a Writ Petition was pending in the Hon'ble High Court of Uttrakhand. It was submitted by the learned Senior Counsel for the resolution applicant that an amount of Rs. 50,00,000/- in addition to the revised bid amount of Rs. 45.12 crores shall be kept apart and deposited in a separate account in consultation with the monitoring agency within a period of seven days from the date of receipt of certified copy of the order that may be passed in this case. 19. The learned counsel for the RP submitted on instructions that no claim with regard to statutory dues and labour dues have been received. The learned counsel for the resolution professional ....
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....he Plan# Amount Provided to the Amount Claimed (%) 1. Dissenting Secured Financial Creditors NIL NIL NIL NIL 2. Other Secured Financial Creditors (i) Punjab National Bank 98.76 98.76 27.48 27. 83 (ii) Oriental Bank of Commerce 59.51 59.51 16.56 27. 83 (iii) Kotak Mahindra Bank 1.37 1.37 0.38 27.73 3. Dissenting Unsecured Financial Creditors NIL NIL NIL NIL 4. Other Unsecured Financial Creditors NIL NIL NIL NIL 5. Operational Creditors (M/s. Mecamidi HPP India Private Limited) 4.71 4.71 0 0 Government NIL NIL NIL NIL Workmen NIL NIL NIL NIL Employees NIL NIL NIL NIL ..... 6. Other Debts and Dues NIL NIL NIL NIL Total 164.35 164.35 44.42 - 24. The compliance of the resolution plan has been given in para No.9 of Form H (supra) as follows:- Section of the Code Regulation No. Requirement with respect to Resolution Plan Clause of Resolution Plan Compliance (Yes/No) 25(2)(h) Whether the Resolution Applicant meets the criteria approved by the CoC having regard to the complexity and scale of operations of business of the CD? Mentioned on Page ....
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....des a statement as to how it has dealt with the interests of all stakeholders? Mentioned in the Resolution Plan on Page 242 of paper book. Yes Regulation 38(2) Whether the Resolution Plan provides: (a) the term of the plan and its implementation schedule? (b) for the management and control of the business of the corporate debtor during its term? (c) adequate means for supervising its implementation? Mentioned in the Resolution Plan on Page 244 of paper book. Yes 38(3) Whether the resolution plan demonstrates that - (a) it addresses the cause of default? (b) it is feasible and viable? (c) it has provisions for its effective implementation? (d) it has provisions for approvals required and the timeline for the same? (e) the resolution applicant has the capability to implement the resolution plan? Mentioned in the Resolution Plan on Page 244 of paper book. Yes 39(2) Whether the RP has filed applications in respect of transactions observed, found or determined by him? Not yet filed No 25. The approval of the resolution plan has been sought under Section 31 (1) of the Code, reading as follows:- "If the Adjudicating Authority is satisfied that the resolution plan ....
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....gy Private Limited Agam Pulp & Paper Private Limited 1. Payment basis 90 90 90 90 2. Financial Strength I. Time for completion and making the Project Operational 6 6(12 Months) 3(24 Months) 5(16 Months) II. Means Available for Acquisition & Operating 4 3 4 3 10 9 7 8 Total 100 99 97 98 28. The score and the criteria adopted in the evaluation matrix as well as the other discussions in the CoC meeting would show that the feasibility and viability were taken into consideration. 29. The objections raised by the learned counsel for the ex-Director are considered. The contention that the Swiss Challenge Method is not applicable in the present case cannot be accepted because it is only after due deliberations spread over a number of meetings that the CoC finally decided to adopt the method for maximisation of the CIRP value and the method ultimately resulted in a substantial increase in the bid value. The approval by the CoC cannot be said to be in exceptional haste since sufficient time was given to H2 and H3 bidders to revise their financial bid and also to H1 bidder to make a revi....
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....buted amongst the creditors; Section 30(2)(b): It is stated in Form H that the liquidation value is Rs. 15.38 crores. In view of the debts of the secured financial creditors being Rs. 159.64 crores, the liquidation value available for the operational creditor would be NIL. The resolution plan however, provides for payment of Rs. 50,00,000/- to operational creditors on the ground that many operational creditors did not file their claims to the RP in time but being the local area operational creditors, they are in a position to create hurdles for project work and it is impossible to fight with them and make the unit operational and therefore, to ensure start of the work at site, Rs. 50,00,000/- has been provided to settle local area operational creditors issues to the discretion of the resolution applicant and with the consent of the resolution professional (page 243 of the application). It was stated in the resolution plan (page 241 of the application) that the payment of Rs. 50,00,000/- to the operational creditors is in addition to the consideration of Rs. 37.25 crores to buy out the unit/100% shareholding of the corporate debtor to the secured financial creditors. The bid amount....
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....hows that the bidding process conducted achieved good results. As regards the plea of conflict of interest between valuer and debris removal agency, we find that the valuer is R.K. Associates Valuers and Techno Engineering Consultants Private Limited and debris removal agency is R.K. Associates (refer Item No.4 of 10th meeting of CoC at Annexure A-14 of the petition). Section 30(2)(c) & (d): At page 10 of the resolution plan (page 244 of the application), it is stated that the proposal is for outright purchase of the unit by way of 100% takeover of shareholding and that the consideration amount shall be paid in one go immediately upon acceptance of the plan. It is stated that a period of 12 months would be required to make the project operational and during the period from June, 2018 to October, 2018, a team of professionals headed by Project Manager (details at Annexure-I) will be assembled and a Technical Consultant appointed to coordinate and provide detailed drawing and designs for completion of work and thereafter construction agencies will be appointed and accommodation at Tapovan acquired for the team and site office for monitoring of construction activities started. It is ....
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....8 of M/s. Kundan Care Products Ld. is stated to be more than Rs. 95.00 crores and revenues Rs. 21970 crores, EBITDA Rs. 86.30 crores (provisional) for the financial year 2017-18. Page 250 of the application is a solvency certificate issued by M/s. ANV & Company, Chartered Accountants certifying that M/s. Kundan Care Products Ltd. is solvent to the extent of Rs. 95.00 crores as disclosed by the information and records (provisional balance sheet as on 31.03.2018) which are supplied and available to them. General profile as well as financial profile of Kundan Care Products Ltd. Is stated to be page 314 of the application. As per undertaking dated 06.06.2018 (page 329 of the application, sources of funds of payment of Insolvency resolution costs and payment to financial creditors and any other creditors is stated to be 100% out of reserves. The estimated amount to be spent for making the project operational is given at page 6 of the Resolution Plan (page 240 of the application) at Rs. 53.00 crores. As regards the technical aspect, we have already discussed above that the proposal is to make the project operational in a period of 12 months and to appoint a team of professionals headed b....