TaxTMI 
TaxTMI 
2019 (9) TMI 710
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.... the following prayers: (a) Pass an order approving the Resolution Plan submitted by the successful Resolution Applicant in respect of the Corporate Debtor under Section 31(1) and declare that the same shall be binding on the Corporate Debtor and its employees, members, all creditors (whether admitted or not including contingent or otherwise), guarantors and other stakeholders in the ICR Process of the Corporate Debtor. (b) Pass appropriate directions for grant of reliefs and waivers sought for by the successful Resolution Applicant under Section 6, Part V of the Resolution Plan. (c) Pass such other order/orders as it may deem fit and proper in the facts and circumstances of the case. 2. For the sake of brevity and convenience, it is mentioned herein that: 2.1 CP(IB) No. 190/2018 was filed by Korba West Power Company Limited, the Corporate Debtor under Section 10 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "Code") read with Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 seeking initiation of Corporate Insolvency Resolution Process of Korba West Power Company Limited (hereinafte....
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....ants as of the last date for submission of expression of interest i.e. 06.11.2018, who were keen to submit resolution plans for the Corporate Debtor. 3.1 It is stated that the Resolution Professional conducted the 3rd (third) meeting of the CoC on 13.11.2018, wherein, the evaluation criteria proposed for prospective resolution applicants was approved by the members of the CoC. 3.2 Thereafter, the Resolution Professional, acting in compliance of Regulation 36A(1)) of the CIR Regulations by way of an email dated 16.11.2018, provided to the members of the CoC, the provisional list of prospective resolution applicants with his comments who met the Qualification Criteria. The Resolution Professional vide said email intimated the members of the CoC that out of the ten (10) prospective resolution applicants, seven (7) were considered to be eligible as per the Qualification Criteria. 3.3 Similarly, on 21.11.2018, the Resolution Professional provided the Information Memorandum in respect of the Corporate Debtor to all 7 (seven) prospective resolution applicants in the provisional list provided by the Resolution professional, in terms of Section 29 of the Code and Regulation 36B of ....
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....voting share in the CoC. 5.2 It is stated that subsequent to the approval of the Resolution Plan by the CoC, the Resolution Professional issued the letter of Intent dated 06.04.2019 to the successful Resolution Applicant i.e. Adani Power Limited in accordance with the RFRP which was accepted by the successful Resolution Applicant, Adani Power Limited on 09.04.2019 and submitted a bank guarantee/demand draft for Rs. 20 crores on 09.04.2019 as performance security in accordance with the provisions of the RFRP. 5.3 In view of the aforesaid facts and circumstances, the Resolution Professional submits Resolution Plan under section 30(6) seeking its approval in terms of Section 31(1) of the Code. 6. The applicant/the Resolution Professional, deliberating the sequence of events right from calling EoI up to approval of the Resolution Plan by the CoC in its tenth meeting held on 01.04.2019 submitted the Resolution Plan duly approved by the CoC and affirming that he has verified the contents of the Resolution Plan and confirmed that it complies with the requirements envisaged under Regulation 38 of the CIR Regulations as well as Section 30 of the Code, and sought for approval of the....
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....orate Debtor has been subjected to any transaction of the nature covered under section 43, 45, 50 or 66, before the one hundred and fifteen day of the insolvency commencement date, under intimation to the Board? NA Nil Resolution 38(1) Whether the Resolution Plan gives priority to the amount due to the operational creditors in payment over financial creditors Section 1.2 Yes Regulation 38(1A) Whether the Resolution Plan includes a statement as to how it has dealt with the interests of all stakeholders? Section 1.2 Yes Regulation 38(1B) (i) Whether the Resolution Applicant or any of its related parties has failed to implement or contributed to the failure of the implementation of any resolution plan approved under the Code. Section 1.7 No (ii) If so, whether the Resolution Applicant has submitted the statement giving details of such non-implementation? Section 1.7 No Regulation 38(2) Whether the Resolution Plan provides: (a) The term of the plan and its implementation schedule? Section 9 Yes (b) For the management and contro....
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.... 5,032.18 99.99% 8. The summary of operational creditors' claims received and reviewed till March 07, 2019 is mentioned below: (Amount INR Crore) Claimant Type Claims Received Claims Status No. of Claims Amount Amount Admitted Amount Under Verification Amount Rejected Workmen - - - - - Employees 1 0.002 - 0.002 - Statutory Bodies 2 1.27 0.68 - 0.58 Vendors 193 279.41 100.12 0.43 178.86 Related Parties 1 10.65 10.65 - - Total 197 291.33 111.45 0.43 179.44 9. On perusal of the records, it is found that amounts provided for the stakeholders under the Resolution Plan as given by the Resolution Professional in its Compliance Certificate, in the form of Form H, are as under: (Amount in Rs. Crores) Sr. No Category of Stakeholder Amount Claimed Amount Admitted Amount Provided under the Plan Amount Provided to the Amount Claimed (%) 1. Secured Financial Creditors 3,349.45 3,346.83 1100 32.84% 2. Unsecured ....
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....ng concern, the Resolution Applicant proposes to provide ex gratia amount of INR 104.28 crores to the Operational Creditors (excluding employees and Workmen) within 6 (six) months from the Effective Date, or such other date(s) as may be mutually agreed with the relevant Operational Creditor. 10.3 It is also submitted that the Resolution Applicant will make upfront cash payment of Rs. 100 crores to the Secured Financial Creditors on pro rata basis. It is also submitted that the Resolution Applicant estimates (a) fund infusion of up to INR 594 crores to meet capital expenditure requirements of the Corporate Debtor and (b) additional capital expenditure of up to INR 480 crores as requirement towards compliance with environmental and other norms. 11. Before proceeding further, it is pertinent to go through the mode of settlement of claims of the different claimants/stakeholders etc. which is reflected in Section 53 and the priorities listed therein, required to be followed in the Resolution Plan. Section 53(1) notwithstanding anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, the proceeds from the sale of ....
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....eaning as assigned to it in section 326 of the Companies Act, 2013 (18 of 2013). 12. Thus, Section 53 of the Code lists the priorities to be given to the beneficiaries, of liquidation value of the assets of the Corporate Debtor. The provisions of Section 53 make it amply clear that Operational Creditors are at the end of the list of beneficiaries as the Secured Financial Creditors have edge over the others. 13. It would also be pertinent to mention here that Operational Creditors have no locus standi as far as approval of the Resolution Plan by the CoC is concerned. As per Section 24(3)(C), they are not eligible to attend and vote at the meetings of CoC if they are holding less than 10% of the total debt. Section 24(3) of the Code reads as under: Section 24: (3) The Resolution Professional shall give notice of each meeting of the committee of creditors to - (a) members of [Committee of Creditors, including the authorized representatives referred to in sub-sections (6) and (6A) of section 21 and sub-section (5)]; (b) members of the suspended Board of Directors or the partners of the corporate persons, as the case may be; (c) oper....
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.... left to imagination stakeholders. Read with long title of the 'I&B Code', functionally, the 'Resolution Plan' must resolve insolvency (rescue a failing, but viable business); should maximize the value of assets of the 'Corporate Debtor', and should promote entrepreneurship, availability of credit and balance the interests of all the stakeholders. In the backdrop of the object of the Code, it is amply clear that the "Resolution is Rule and the Liquidation is an Exception". Liquidation brings the life of a corporate to an end. It destroys organizational capital and renders resources idle till reallocation to alternate uses. Further, it is inequitable as it considers the claims of a set of stakeholders only if there is any surplus after satisfying the claims of a prior set of stakeholders fully. The 'Insolvency and Bankruptcy Code', therefore, does not allow liquidation of a 'Corporate Debtor' directly. It allows liquidation only on failure of 'corporate insolvency resolution process'. It rather facilitates and encourages resolution in several ways. The said objective of the Resolution Plan is affirmed in the decision ....
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....financial creditors have accorded approval to the resolution plan would be of no avail, unless the approval is by a vote of not less than 75% (after amendment of 2018 w.e.f. 06.06.2018, 66%) of voting share of the financial creditors. To put it differently, the action of liquidation process postulated in Chapter-III of the I&B Code, is avoidable, only if approval of the resolution plan is by a vote of not less than 75% (as in October, 2017) of voting share of the financial creditors. Conversely, the legislative intent is to uphold the opinion or hypothesis of the minority dissenting financial creditors. That must prevail, if it is not less than the specified per cent (25% in October, 2017; and now after the amendment w.e.f 06.06.2018, 44%). The inevitable outcome of voting by not less than requisite per cent of voting share of financial creditors to disapprove the proposed resolution plan, dejure, entails in its deemed rejection." "35. Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited to scrutiny of the resolution plan "as approved" by the requisite per cent of voting share of financial creditors. Even in that enquiry, the ....
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....embers of the CoC; the purchase price is undervalued and depressed and fails to achieve the Fair Market Value and the Resolution Plan has failed to maximize the value of the assets of the Corporate Debtor, the Forensic Audit Report has not been circulated/provided amongst the Lenders despite the lenders being informed that the copy would be provide and the Resolution Plan is attempting to foist mandatory obligation on the Lenders without considering that for any approval, restructuring of debts , the Lenders have to comply with the directions and Guidelines laid down by the Reserve Bank of India and also the Lender Banks Internal Circular. On perusal of the records, it is found that Corporation Bank is holding 3.12% of the voting share. Further, the CoC in its meeting held on 01.04.2019 has approved the Resolution Plan by 69.08% of voting in favour of the Resolution Applicant. That at the time of approval of the Resolution Plan, the Corporation Bank was very much present in the meeting, being one of the Financial Creditors. Admittedly, the Corporation Bank is the dissenting member of the CoC and if being aggrieved by the decision of the CoC, could have approached this Adju....
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..... - For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013(18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law. (3) The resolution professional shall present to the committee of creditors for its approval such resolution plans which confirm the conditions referred to in sub-section (2). "(4) The committee of creditors may approve a resolution plan by a vote of not less than sixty-six per cent, of voting share of the financial creditors, after considering its feasibility and viability, and such other requirements as may be specified by the Board: Provided that the committee of creditors shall not approve a resolution plan, submitted before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, where the resolution applicant is ineligible under section 29A and may require the resolution professional to invite a fresh resolution plan where no other resolution plan is available with it: Provided further t....
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.... the reliefs and waivers sought by the Resolution Applicant. As far as reliefs and waivers sought in Clauses 6.1 (i), (vii), (xi), (xii), (xiv), (xv), (xvi) and (xvii) are concerned, the said clauses are clarificatory in nature and the Resolution applicant would not be liable to discharge any financial obligation or any financial liabilities prior to the Effective Date. 18.2 For the other reliefs and waivers mentioned in Clause 6, this Adjudicating Authority is of the considered view that these are the matters related with the concerned competent authorities, hence the Resolution Applicant may approach those competent authorities for relief(s) and waivers sought by them, for their consideration. However, looking to the very pious objective of the IBC, it is expected from those competent authorities to extend their support and cooperation to the Resolution Applicant for the effective implementation of the Resolution Plan by allowing reasonable time in the form of any relief(s) and/or concession(s) as the case may be and/or agreed between the parties to run the Company/Corporate Debtor as a going concern. 18.3 It may further be observed that approval of the Resolution Plan, doe....