AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 1055
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....vency resolution of the corporate debtor as a going concern. 1.1 The applicant has also submitted affidavits dated December 12, 2019 and affidavit dated December 31, 2019 and rectified the clerical mistakes made in their petition and the submission of the resolution plan. 2. For the sake of convenience, it is mentioned herein that : 2.1 C. P. (IB) No. 299 of 2018 was filed by the financial creditor, viz., Reliance Commercial Finance Ltd., respondent No. 2 under section 7 of the IB Code seeking initiation of corporate insolvency resolution process against V. S. Texmills P. Ltd., the corporate debtor, having registered office at 342, Govindpura Nadiad Mehmdabad Road, VillKamla, Taluka Nadian, District Kheda, Gujarat-387 320. 2.2 The said C. P. (IB) No. 299 of 2018 was admitted on January 9, 2019 by this Adjudicating Authority and appointed Smt. Bhavi Shreyans Shah, as an interim resolution professional (hereinafter referred to as "IRP"). 2.3 The IRP, so appointed, made public announcement on January 12, 2019 as per the provisions of section 15 of the Code calling upon the claims from the creditors in view of the order dated January 9, 2019 of this Adj....
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..... 5.4 The applicant vide his affidavit dated December 12, 2019 submits that RA, in all, submitted four (4) addendums dated July 25, 2019, July 25, 2019, September 5, 2019 and September 11, 2019 and the members of the CoC voted and approved the resolution plan dated June 20, 2019 along with the final addendum dated September 11, 2019. The said resolution plan dated June 20, 2019 and the addendum dated September 11, 2019 was placed before the CoC for e-voting in the ninth meeting of the CoC which was convened on October 3, 2019 and thereafter e-voting was conducted from October 4, 2019 to October 5, 2019. The CoC approved the said resolution plan dated June 20, 2019 with addendum dated September 11, 2019 with majority voting share of 92.44 per cent. 6. The RP vide compliance certificate in the form of Form H has submitted liquidation value of the corporate debtor as Rs. 4,63,89,800. 7. Pursuant to the approval of the resolution plan by the CoC under section 30(4) of the Code (as amended on June 6, 2018) as the successful resolution plan, the resolution professional filed the instant application being I. A. No. 664 of 2019 under section 30(6) of the Code seeking its approval ....
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....nsolvency commencement date, under intimation to the Board ? No transaction falling within times specified under section 43, 45, 50 or 66 Yes 8. Regulation 38(1) Whether a resolution plan identifies specific source of funds that will be used to pay the- Part L (a) insolvency resolution process costs ? Yes (b) liquidation value due to operational creditors ? Yes (c) liquidation value due to dissenting financial creditors ? Yes 9. Regulation 38(1A) Whether the resolution plan includes a statement as to how it has dealt with the interests of all stakeholders ? Minutes of 9th meeting of the CoC and Part L Yes 10. Regulation 38(2) Whether the resolution plan shall provide : (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 ; and (c) adequate means for supervising its implementation ? (a) Part L (b) Part M (c) Part N Yes Yes Yes 11. Regulation 38(3) Whether resolution the plan demonstrates that : (a) (a) Yes ....
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....mounting to Rs. 4,54,57,711. * That, the total outstanding operational debt of the company pro visionally admitted by the resolution professional towards its operational creditors is Rs. 1,37,73,192 (rupees one crore thirty seven lakhs seventy three thousand one hundred ninety two) as set out in part of the resolution plan, based on the information memorandum. * That, as per the information memorandum provided by the resolution professional, there is no amount outstanding due to worker or employee of the corporate debtor. A statement showing the amount of claim and amount proposed to be paid is given below : Name of claim Amount of claim admitted by IRP/RP Amount proposed by RA IRP cost 25,00,000 25,00,000 Financial creditors 16,31,41,624 4,44,00,000 Workers Nil Nil Employees Nil Nil Operational creditors 1,37,73,192 6,00,000 Statutory dues Nil Nil Shareholders NA Nil Total : 17,94,14,816 4,75,00,000 A statement showing sources of funds and applicability of the funds is mentioned hereunder : Application of funds Rs. in lakhs Sources of funds Rs. in lakhs ....
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.... period of twenty four months pre ceding the liquidation commencement date ; and (ii) debts owed to a secured creditor in the event such secured creditor has relinquished security in the manner set out in section 52 ; (c) wages and any unpaid dues owned to employees other than workmen for the period of twelve months preceding the liquidation commencement date ; (d) financial debts owed to unsecured creditors ; (e) the following dues shall rank equally between and among the following :- (i) any amount due to the Central Government and the State Government including the amount to be received on account of the Consolidated Fund of India and the Consolidated Fund of a State, if any, in respect of the whole or any part of the period of two years preceding the liquidation commencement date ; (ii) Debts owed to a secured creditor for any amount unpaid following the enforcement of security interest ; (f) any remaining debts and dues ; (g) preference shareholders, if any ; and (h) equity shareholders or partners, as the case may be. (2) Any contractual arrangement between recipients under subsection (1....
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....te and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in time bound manner for maximization of the value of assets of such persons, to promote entrepreneurship, availability of credit, and balance the interests of all stakeholders including alteration in the priority of the payments of the Government dues, to establish an Insolvency and Bankruptcy Fund and matters connected therewith or incidental thereto." Thus, the preamble of the I and B Code aims to promote resolution over liquidation. The purpose of resolution is for maximization of value of assets of the "corporate debtor" and thereby for all creditors. It is not maximization of value for a "stakeholder" or "assets of a stakeholder" such as creditors and to promote entrepreneurship, availability of credit and balance the interests. The first objective is "resolution". The second objective is "maximization of the value of assets of the "corporate debtor" and third objective is "promoting entrepreneurship, availability of credit and balancing the interests". This objective of the I and B Code is sacrosanct. The said objective....
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....the Legislature is, that the priority is to be given to the resolution than liquidation in the larger interests of the public, workmen, stake holders and the other employees of the corporate debtors in the interest of justice and in order to achieve the object of the Code and liquidation of a company can be only as a last resort, wherein, all efforts for bringing resolution plan were failed or it cannot be found workable in the larger public interest. Hence, now the approval of resolution plan by this Adjudicating Authority is rule as per the apex court's decision in the matter of K. Sashid har v. Indian Overseas Bank [2019] 213 Comp Cas 356 (SC) as discussed above. The hon'ble Supreme Court in its recent judgment in Civil Appeal No. 10673 of 2018 in K. Sashidhar v. Indian Overseas Bank [2019] 213 Comp Cas 356 (SC). Comprising of the hon'ble Justice A. M. Khanwilkar and hon'ble Justice Ajay Rastogi observed that Adjudicating Authority has no jurisdiction to interfere with the commercial wisdom of the CoC. 14. On perusal of the records, it is found that the resolution plan conforms to the criteria as provided under clauses (a) to (f) in section 30(2) of t....
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....cial 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 afresh resolution plan where no other resolution plan is available with it : Provided further that where the resolution applicant referred to in the first proviso is ineligible under clause (c) of section 29A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of section 29A : Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section (3) of section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub-section : Provided also that the eligibility criteria in s....