TaxTMI 
TaxTMI 
2019 (12) TMI 514
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....r. Mr. V. Venkatachalam/ the Applicant herein, was appointed as the Interim Resolution Professional ("IRP") of the Corporate Debtor. (2) Consequent to his appointment as IRP, the Applicant herein issued a public announcement on November 12, 2018 in terms of Regulation 6(l) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations"), inviting claims from all stakeholders. (3) The Applicant/ IRP collated and verified claims received up to November 23, 2018 and constituted the Committee of Creditors ("COC") as per Regulation 17(1) of the CIRP Regulations, on November 30, 2018 as under. Pursuant to which, report for constitution of COC was filed in this Tribunal complying the provisions of the IBC read with regulation 17(l) of the CIRP Regulations. (a) IDBI Bank Limited; (b) Standard Chartered Bank; (c) Oriental Bank of Commerce; (d) Axis Bank Limited; (e) Indian Overseas Bank; (f) State Bank of India; (g) Punjab National Bank; (h) Edelweiss Asset Reconstruction Company Limited (EARC); (i) Central Bank of Ind....
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....ceipt of Expression of Interest to February 28, 2019 and authorised the Applicant with a discretion to further extend the said date. 6. In the third meeting of the COC held on March 6, 2019, the COC unanimously extended the last date for submissions of EOI to March 13, 2019. Further CoC agreed to issue Request for Resolution Plans along with the Evaluation Matrix. 7. At the fourth meeting of the COC held on March 28, 2019 the COC rejected the term sheet submitted by the Deutsche Bank AG for a facility of Rs. 345,00,00,000/-(Rupees Three Hundred and Forty Five Crores). 8. In the 5th COC meeting held on April 15, 2019, the COC extended the timeline for submission of resolution plan from April 18, 2019 to May 17, 2019. Further since CIRP period was ending on 08.05.2019, this Tribunal extended the period by another 90 days from 08.05.2019 based on the application filed under section 12(2) of the Code. 9. At the sixth meeting of the COC held on May 17, 2019, CoC was apprised by Resolution Professional about the extension of CIRP granted by this Tribunal till August 6, 2019 and also with respect to the submission of the resolution plan by the Resolutio....
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.... OF THE FINANCIAL CREDITOR (NON RELATED PARTIES) AMOUNT CLAIMED (Rs.) CLAIM ADMITTED (Rs.) CLAIM NOT ADMITTED (Rs.) SECURITY INTEREST AND GUARANTEE (Rs.) 1 IDBI Bank Limited 1623,33,93,480 1623,33,93,480 - Yes 2 Standard Chartered Bank 884,76,35,777 884,76,35,777 - Yes 3 Oriental Bank of Commerce 382,12,97,017 382,12,97,017 - Yes 4 Axis Bank Limited 341,12,00,492 341,12,00,492 - Yes 5 Indian Overseas Bank 330,81,53,947 330,81,53,947 - Yes 6 State Bank of India 225,60,80,776 225,60,80,776 - Yes 7 Punjab National Bank 205,02,05,879 205,02,05,879 - Yes 8 Edelweiss Asset Reconstruction Company Ltd. 175,32,89,723 175,32,89,723 - Yes 9 Central Bank of India 147,17,25,277 147,17,25,277 - Yes 10 UCO Bank 114,60,78,418 114,60,78,418 - Yes 11 India Opportunities III Pte Ltd 104,68,39,860 104,68,39,860 - Yes 12 Bank of India 78,24,81,002 78,24,81,002 - Yes 13 Assets Care and Reconstruction Enterprise Limited 73,13,98,337 73,13,98,337 - Yes 14 Pu....
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....roleum Corporation Limited 39,74,86,224 - - 39,74,86,224 10 Inox Air Products Pvt. Ltd. 34,24,50,661 - - 34,24,50,661 11 Vikas Coal and Minerals Private Ltd. 33,05,94,453 33,05,94,453 - - 12 Kepco Plant Service & Engineering Co. Ltd. 31,32,32,939 23,46,53,742 7,85,79,197 - 13 KSK Energy-Ventures Limited 29,24,53,899 29,24,53,899 - - 14 Pudumjee Paper Products Ltd. 27,33,79,390 - - 27,33,79,390 15 Maharashtra State Load Despatch Centre 22,85,75,903 22,06,63,497 79,12,406 . 16 Bhasin Materials Pvt. Ltd. 20,75,68,103 12,49,09,256 8,26,58,847 - 17 Maharashtra Industrial Development Corporation 18,73,00,000 18,34,50,166 38,49,834 - 18 Mahindra & Mahindra Limited 14,69,74,692 3,81,11,274 - 10,88,63,418 19 Punjab Transport Company 14,26,62,371 9,77,14,887 4,49,47,484 - 20 Chennai Radha Engineering Works Pvt. Ltd. 13,33,50,956 8,77,54,903 4,55,96,053 - 21 Mcnally Bharat Engineering Co. Ltd. 12,73,97,847 11,51,25,090 1,22,72,757 - 22 Balaji Associates 11,80,....
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....iyar 36,09,221 11,93,686 24,15,535 - 53 Suresh Chand Gupta 33,00,000 20,06,352 12,93,648 - 54 Civitech Services Private Limited 30,49,056 16,19,494 14,29,562 - 55 Sunrise Bearing Corporation 30,10,755 30,10,755 - - 56 Rohan Chemicals 29,94,420 29,94,420 - - 57 Abhijeet Intelligence Securities and Labour Suppliers 29,53,577 29,53,577 - - 58 NALCO Water India Limited 26,16,322 20,16,322 6,00,000 - 59 Mahabal Enviro Engineers Pvt. Ltd. 24,31,060 10,24,556 14,06,504 - 60 Urja Manpower Consulting Pvt. Ltd. 21,09,561 21,08,683 878 - 61 Karthikay Coal Washeries Pvt. Ltd. 21,03,005 21,03,005 - - 62 National Event Mangement & Decor 17,85,581 17,61,313 24,268 - 63 Krishna Construction 17,65,308 13,30,440 4,34,868 - 64 RCC Infrastructure Consultants 17,00,000 15,30,000 1,70,000 - 65 Umare Chemicals 13,62,855 13,62,855 - - 66 Bhadrakali Enterprises 13,10,337 4,31,361 8,78,976 - 67 Yande Polymers 11,66,148 8,42,151 3,23,....
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....s 1,20,450 1,20,450 - - 102 Ziet Engineers Pvt. Ltd. 1,18,000 1,18,000 - - 103 Surya Super Electricals 1,10,344 1,10,344 - - 104 Toughleak Engineering 1,07,380 1,06,470 910 - 105 Aditya Enterprises 99,217 75,529 23,688 - 106 Mantri Sales Corporation 91,040 89,902 1,138 - 107 Sajjan Enterprises 83,900 - 83,900 - 108 Ketan Multimedia 83,245 77,338 5,907 - 109 Tech Axial 70,875 70,125 750 - 110 Jai Sharda Maa Tours & Travels 70,000 69,300 700 - 111 Global Sales and Engineering Services 67,017 32,319 34,698 - 112 Beacon Engineers 63,573 63,573 - - 113 Tata Projects Ltd. 60,180 55,080 5,100 - 114 N & T Corporation 57,348 57,198 150 - 115 Vinson Enterprises 53,843 53,843 - - 116 Vulcan Industries 49,875 49,875 - - 117 Jumde Agencies 48,874 48,874 - - 118 Seashell Logistics Pvt. Ltd. 48,542 41,600 6,942 - 119 Gunatit Ceramics 45,759 45,759 - - 120 Dural....
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....,25,277.00 1,47,17,25,277.00 3.11% 10 UCO Bank 1,14,60,78,418.00 1,14,60,78,418.00 2.42% 11 India Opportunities III Pte Ltd. 1,04,68,39,860.37 1,04,68,39,860.37 2.21% 12 Bank of India 78,24,81,001.83 78,24,81,001.83 1.65% 13 Assets Care and Reconstruction Enterprise Limited (ACRE) 73,13,98,337.00 73,13,98,337.00 1.54% 14 Punjab & Sind Bank 52,31,65,953.00 52,31,65,953.00 1.10% TOTAL 47,38,29,45,938.22 47,38,29,45,938.22 100.00% 16. The Applicant has furnished a certificate dated July 27, 2019 certifying the compliance of the successful Resolution Applicant under section 29A of the Code. A copy of the said Section 29A compliance certificate is marked as Annexure "M". The Applicant also issued compliance letter vide letter dated July 27, 2019 in relation to the Resolution Plan submitted by the Resolution Applicant. A copy of the said compliance letter is marked as Annexure "N". 17. A performance bank guarantee of Rs. 50,00,00,000 (Rupees Fifty Crores Only) from the Resolution Applicant as required under Regulation 39 of the CIRP Regulations is annexed and marked as....
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.... Hundred And Thirty Five Crores Only) is proposed to be paid to the financial creditors (excluding financial creditors who are related parties who are proposed to be paid NIL amount) of the Corporate Debtor, including towards residual surviving debt of foreign currency term loans). Out of such amount, an upfront payment of INR 10,00,00,000 (Rupees Ten Crores Only) ("Upfront Payment Against FC Debt") is proposed to be made within 60 days of the Resolution Plan being approved by this Tribunal ("Effective Date"). The residual surviving debt of INR 625,00,00,000 (Rupees Six Hundred And Twenty Five Crores Only) ("Residual Debt") shall be serviced in the following manner, as per the schedules and commercial terms (including interest and repayment terms) indicated in the Resolution Plan: a. Secured financial creditors will first be allocated an amount equivalent to liquidation value payable to them in the event of liquidation of the Corporate Debtor. For this purpose, net present value of the aggregate amount allocated to financial creditors will be considered, and in its determination, assumptions for calculating net present value shall be as per 'Request for Resolution Plan....
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....ed among other operational creditors of the Corporate Debtor in the manner set out in the Resolution Plan. (vii) If the liquidation value payable to the operational creditors in the event of liquidation of the Corporate Debtor ("Operational Creditor Liquidation Value") is determined to be higher than the Non-Financial Creditor Allocated Amount, the entire Operational Creditor Liquidation Value as reduced by CIRP Costs will be paid to the respective Operational Creditors (including workmen and employees). (viii) Some of the operational creditors have approached different legal forums challenging the rejection of their claims. In the event that some of these rejected claims or contingent claims could get crystallized after the date of submission of the Resolution Plan, it proposes to distribute the Operational Creditors and Other Creditors Allocated Amount in the following manner: A. Operational creditors with admitted claims shall be paid an amount in proportion to their share of the overall claims i.e. admitted, rejected as well as contingent claims ("Overall Claims"). B. Balance amount shall be kept in an escrow for a period of 24 months. As and....
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....n 5 business days from the approval of this Resolution Plan by the Adjudicating Authority. 4. The Steering Committee shall issue a notice of termination to the existing O&M contractor in relation to the project owned by the Corporate Debtor and/or its affiliates for termination of all agreements and arrangements with the existing O&M contractor and/or its affiliates. The Resolution Applicant shall ensure smooth transition between the existing O&M contractor and the new O&M contractor. Within 10 business days from the approval of this Resolution Plan by the Adjudicating Authority. 5. The Resolution Applicant will, pursuant to the discussion with the COC execute definitive agreements as may be necessary to implement this Resolution Plan (including an assignment agreement in the form approved/circulated by the Indian Banks' Association) and the parties thereto shall comply with the conditions set out therein from the date of their execution. Within 20 days From the approval of this Resolution Plan by the Adjudicating Authority. 6. Pursuant to the approval of the Resolution Plan by the Adjudicating Authority, the Corporate Debtor shall open a trust and reten....
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....quent reduction in the subscribed, issued and paid up equity share capital of the Corporate Debtor. All and every outstanding redeemable preference share of all classes shall be extinguished and cancelled without payment of any consideration to such shareholders, including extinguishment and cancellation of: (a) every and all outstanding 0.01% Class A Redeemable Preference Shares?; (b) every and all outstanding 0.01% Class B Redeemable Preference Shares; (c) every and all outstanding 0.01% Cumulative Redeemable Preference Shares; and (d) every and all outstanding Cumulative Redeemable Preference Shares. On the Effective Date. 9. On completion of Step 8, the Resolution Applicant will cause the Corporate Debtor to pay and discharge in full the CIRP Costs On the Effective Date (subject to completion of Step 5 and Step 6). 10. On completion of Step 8, the Resolution Applicant will cause the Corporate Debtor to pay workmen and employees, statutory dues, operational creditors and other creditors as per agreed terms. Balance amount shall be kept in an escrow for a period of 24 months, as and when additional claims get admitted/crystallized, such operational creditors sha....
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....s) Financial Creditor 10 625 As per details covered the table below, to be repaid in 32 instalments, within the completion of 8 years from the Effective Date and carrying an interest of 9.5% per annum, payable monthly. NA Operational Creditor and Other Creditors 5 (this is an estimate, subject to change and settlement through the escrow mechanism as set out in the Resolution Plan and point 9 of the process chart in paragraph 1.3 above) NA NA NA CIRP Cost 18.33 (estimated as on the date of the application) NA NA NA Workmen and Employees 1.67 NA NA NA Working/ Fresh Capital Infusion (Fresh Infusion for improvement of business operations, working capital etc.) 70 325 NA NA Total 105 (subject to changes in the CIRP Cost) 950 --NA-- --NA-- d. Security for Residual Payment The term loan of INR 625,00,00,000 (Rupees Six Hundred and Twenty Five Crores) shall be restructured into a 8 year term loan secured by first charge on fixed assets and second charge on current assets of the Corporate Debtor; and such restructured term loan shall carry interest @ 9.5% per annum payable monthly. ....
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....r payable by the Corporate Debtor to the financial creditors who are related parties under section 29A of Code, whether admitted as claims or not, shall stand cancelled, waived, and remitted by the respective financial creditor, and upon approval of the resolution plan, the financial creditors who are related parties under section 29A of Code shall have no claim whatsoever against the Corporate Debtor, and any and all such claims shall stand waived. (c) Cancellation of dues: 100% of the amount not admitted as due or payable, and INR 4103,29,45,938 (Rupees Four Thousand One Hundred and Three Crore Twenty Nine Lakhs Forty Five Thousand Nine Hundred and Thirty Eight) of the amount due or payable, by the Corporate Debtor to each financial creditor other than related parties under section 29A of the Code, admitted as claims (including but not limited to amounts admitted as due or payable to: (i) IDBI Bank Limited (ii) Standard Chartered Bank; (iii) Oriental Bank of Commerce; (iv) Axis Bank Limited; (v) Indian Overseas Bank; (vi) State Bank of India; (vii) Punjab National Bank; (viii) Edelweiss Asset Reconstruction Company Limited; (ix) Central Bank of India; (x) ....
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....the Adjudicating Authority and the Effective Date of this Resolution Plan ("Interim Period"), the Steering Committee shall: (a) carry on the business with reasonable diligence and business prudence and in the same manner as it had been doing hitherto, and shall not undertake any additional financial commitments of any nature whatsoever, borrow any amounts or incur any other liabilities or expenditure, issue any additional guarantees, indemnities, letters of comfort or commitment either for themselves or on behalf of its respective affiliates or associates or any third party, or sell, transfer, alienate, charge, mortgage or encumber or deal in any of its properties/assets, except: i. when the same is expressly provided in this Resolution Plan; or ii. when the same is in the ordinary course of business as carried on, as on the date of approval of this Resolution Plan; or iii. when written consent of the Resolution Applicant has been obtained in this regard; (b) except as provided in the Resolution Plan, not make any change in capital structure of the Corporate Debtor either by way of any increase (by issue of equity shares, bonus shares, c....
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....red by the Corporate Debtor and to procure that the Corporate Debtor applies for the same. (c) The Collector of Stamps, Revenue Department, of any State Government and the Ministry of Corporate Affairs to exempt the Resolution Applicant and the Corporate Debtor, from the levy of stamp duty and fees applicable in relation to this Resolution Plan and its implementation, including any stamp duty applicable on the issue of shares by the Corporate Debtor. (d) The relevant State Pollution Control Boards to approve renewal of the consents to establish/ operate obtained by the Corporate Debtor under applicable provisions of the Water (Prevention and Control of Pollution) Act, 1974, Air (Prevention and Control of Pollution) Act, 1981. (e) All Governmental authorities to waive all past non-compliances of the Corporate Debtor under applicable laws, and the Corporate Debtor and the Resolution Applicant shall not be liable for any non-compliances under applicable laws for the period prior to the Effective Date. (f) To the extent that any Government approvals obtained or required to be obtained by the Corporate Debtor may have lapsed, expired, suspended, cance....
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....cant shall have the right to renegotiate the terms of all agreements or terminate all agreements executed by the Corporate Debtor with any third parties, in its sole discretion, without any additional liabilities, penalties or other onerous obligations accruing to the Corporate Debtor or the Resolution Applicant. It is clarified that such third parties will not have the right to terminate their agreements with the Corporate Debtor. (m) Other than as set out herein, all the contracts executed by the Corporate Debtor which were valid and subsisting as on each of the insolvency commencement date in respect of the Corporate Debtor shall be renewed/extended. (n) On and from the Effective Date, all accounts of the Corporate Debtor shall stand regularised and their asset classification shall be "standard" to the extent permitted under all Applicable Laws. (o) All agreements and arrangements between the Corporate Debtor and any Promoter Related Parties shall stand terminated without any additional liabilities, penalties or other onerous obligations accruing to the Corporate Debtor or the Resolution Applicant. It is clarified that such third parties will not have ....
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.... transmission agreement with Maharashtra State Electricity Transmission Corporate Debtor shall stand terminated without any obligations, liabilities or penalties to, or on, the Corporate Debtor or the Resolution Applicant. 4. Further the following changes were made in response to the observations raised by the Committee of Creditors and its advisors prior to and during the CoC meeting on 26th July 2019. The Applicant herein filed memo dated 26.09.2019 intimating to the Adjudicating Authority, the following changes made to the Resolution Plan dated 23rd July 2019 by way of an addendum: This addendum forms an integral part of the Resolution Plan dated 23rd July 2019 submitted by the Resolution Applicant. Sl. No. Reference to the Resolution Plan dated 23rd July 2019 Original Sentence Revision/Addition/Deletion Revised Sentence 1 Section 1(c) - Proposal to Operational Creditors and Other Creditors (excluding Workmen and Employees) - First bullet point; Page no. 3 Total claims by Operational Creditors and other Creditors aggregate to INR 1906,27,86,47, out of which claims aggregating to INR 325,66,81,348 ("OC Debt") have been verified and admitted for the purp....
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....is requested to include the following clause in the Resolution Plan - First paragraph; Page 14 Notwithstanding anything to the contrary contained in this Resolution Plan or any other documents including any definitive documents, the Eligible Resolution Applicant [together with the co-applicants] agrees and confirms that there are no conditions, assumptions and/or qualifications for effectiveness of the Resolution Plan by the Eligible Resolution Applicant [and co-applicants], whether before approval by Adjudicating Authority or thereafter until the Effective Date other than the following conditions precedent Revision Notwithstanding anything to the contrary contained in this Resolution Plan or any other documents including any definitive documents, the Eligible Resolution Applicant [together with the co-applicants] agrees and confirms that there are no conditions, assumptions and/or qualifications for effectiveness of the Resolution Plan by the Eligible Resolution Applicant [and co-applicants], whether before approval by Adjudicating Authority or thereafter until the Effective Date. 7 Section 6 - provide an exhaustive list of the conditions precedent to effectiveness ....
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....ution Professional in person. This Application is filed under Section 30 (6) of Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as "CODE") for approval of the Resolution Plan submitted by Consortium of Sri City Private Limited and KCR Enterprise LLP ("Resolution Applicant"). 6. The Learned Counsel for Applicant stated that as per resolution passed in the 1st CoC Meeting, two Registered Valuers were appointed who submitted their valuation reports on April 26, 2019 and April 30, 2019 respectively as under:- Sl.No. Name of the Valuer Liquidation Value (Rs in crores) Fair Value (Rs. In crores) 01 Duff & Phelps India Private Limited 585.50 1,161.00 02 Ernst & Young Merchant Banking Services Private Limited 608.50 1,897.60 Average Valuation 597.00 1,529.30 7. The Resolution Plan submitted by Consortium of Sri City Private Limited and KCR Enterprise LLP ("Resolution Applicant") was approved by CoC with 75.91% voting in favour of it. The minutes of the tenth meeting of the COC held on July 25, 2019 is marked as Annexure "L". The list of Financial Creditors of the Corporate Debtor and their distribution of voting share....
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.... Professional on account of non-admittance of their claims. As such the Resolution Plan proposes an escrow mechanism wherein amount proposed for operational creditors shall be deposited from which pro rata payments will be made against claims which crystallise and gets admitted within 24 months. It is also stated that after the expiry of such period, the balance amounts shall be distributed to all operational creditors in proportion to their admitted claims. 9. It is also stated by the Resolution Professional that the interests of existing shareholders were altered by the Resolution Plan as under:- Sl. No. Category of Share holder No. of shares held before CIRP No. of shares held after the CIRP Voting share (%) held before CIRP Voting share (%) held after CIRP 1 Equity 404,140,146 Nil 100% Nil 2 Preference 434,742,292 Nil Nil Nil 10. The Resolution Professional filed copy of Performance Bank Guarantee dated 06.08.2019 for Rs. 50,00,00,000/- on behalf of Consortium of Sri City Private Limited and KCR Enterprise LLP ("Resolution Applicant") valid up to 05.08.2020. The Resolution Professional filed an undertaking dated 27.07.....