AI Drafter 
TaxTMI 
TaxTMI 
2020 (4) TMI 447
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of Corporate Insolvency Resolution Process (CIRP) in the case of M/s SRS Meditech Limited (hereinafter referred to as Corporate Debtor) and the same was admitted vide order dated 2-11-2018 and the CIRP of the corporate debtor was initiated. It is submitted that the applicant was appointed as Interim Resolution Professional (IRP) vide order dated 15-11-2018 and within two days of the appointment order, the IRP issued a public announcement as per Regulation 6 of the Regulations read with Section 15 of the Code in Form A in two newspapers i.e. Amar Ujala, (Hindi) dated 17-11-2018 and Business Standard (English) on 17-11-2018 thereby inviting claims from the creditors of the corporate debtor as envisaged in the Code. 3. It is submitted that in pursuance of the public announcement, total 7 claims were received from the financial creditors which were verified and after collation, the IRP constituted the CoC provisions of Section 21 of the Code It is stated that initially the CoC was constituted with seven financial creditorsi.e., State Bank of India having a voting share of 59.39%, Epimoney Private Limited having a voting share of 1.58%, Edelweiss Retail Finance Limited having a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....61,370.54 25,61,370.54 0.85% The RP apprised the CoC that EOI was received from four prospective resolution applicant namely, Harish Arora, Anil Prakash Aggarwal, Prudent ARC Limited and Vaibhav Buildtech Private Limited. The COC approved the eligibility criteria of net worth of Rs. 5.00 crores for submission of resolution plan and the evaluation matrix proposed by the RP. The RP also apprised the COC regarding appointment of Statutory Auditor for the financial year 2017-18. The last date for submission of resolution plan was fixed at 15-4-2019. 7. The RP apprised the CoC in its 4th meeting that the eligibility criteria of all the resolution applicants is as per EOI published on 31-1-2019 and therefore invitation for submission of resolution plan has been sent to all the four prospective applicants. The last date for submission of resolution plan was extended to 31-5-2019 as verification of plant and machinery by the resolution applicants were still pending. 8. CA No. 324 of 2019 was filed by the RP under section 12(2) of the IBC, 2016 for extension of the CIRP time period by a further period of 90 days and the same was allowed vide order dated 10-5-2019. A copy of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 4 of Form H that the resolution plan complies with all the provisions of the Code, CIRP Regulations and does not contravene any of the provision of law for the time being in force and that the resolution plan stands duly approved by the 93% of the voting share of the financial creditors. 13. It is submitted that the CoC while accepting the bid had taken care of all the provisions of the Code and the Regulations. It is prayed that the application may be allowed and the resolution plan as approved by the CoC in the CIRP of the corporate debtor be approved. 14. The learned counsel for the resolution professional submitted that as per revised Form H (AnnexureA-1, Diary No. 5221 dated 30-9-2019), all the provisions of the Code and the Regulations were complied with and that the approval of the resolution plan was made by 93% voting share of the financial creditors in the meeting of the CoC held on 31-7-2018 and therefore, the resolution plan submitted by M/s.Vaibhav Buildtech Private Limitedmay be approved. 15. During the course of hearing on 22-10-2019, the learned counsel for the RP was directed to file the computation in terms of amended Section 30(2) of the Code, missing A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s no definition of key lender referred in the resolution plan. However, SBI having 56.62% voting share and being the only bank in the CoC is the Key Lender. Rest all other financial creditors are Non-Banking Finance Companies. The member of Advisory Board referred in the resolution plan is technical expert by the CoC. The revised affidavit as per Section 29 A is annexed as Annexure A-2 of the affidavit. 19. We have carefully considered the submissions of the learned counsel for the RP and the learned Senior Counsel for the resolution applicant and have also perused the record. 20. The corporate debtor was incorporated on 28-6-2010 and as discussed above, the CIRP proceedings were initiated by order delivered on 2-11-2018. The present application is filed for approval of the resolution plan submitted by M/s.Vaibhav Build tech Private Limited. The approval has been sought under the provisions of Section 31 (1) of the Code. 21. We may first of all state that after receipt, verification and collation of claims as discussed above, the IRP constituted the CoC as per the provisions of Section 21 of the Code. The details of the financial creditors, the distribution of voting share....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... CoC having regard to the complexity and scale of operations of business of the CD? The criteria of Resolution Applicant Net worth was Rs. 500.00 Lakh. The Resolution Applicant meets the criteria and submitted Net Worth Certificate. Part 1, Business Plan of the Resolution Applicant Page 254- 259 Yes Section 29A Whether the Resolution Applicant is eligible to submit resolution plan as per final list of Resolution Professional or Order, if any, of the Adjudicating Authority? The Resolution Applicant has submitted an affidavit 1st August 2019 stating that, they are eligible to submit Resolution Plan. Annexure A-19 Page 285- 286 Yes Section 30(1) Whether the Resolution Applicant has submitted an affidavit stating that it is eligible? The Resolution Applicant has submitted an affidavit 1st August 2019 stating that, they are eligible to submit Resolution Plan. Annexure A-19 Page 285- 286 Yes Section 30(2) Whether the Resolution Plan: (a) provides for the payment of insolvency resolution process costs? Part IV of the Resolution Plan, Para 3 Page 264 Yes The Resolution Applicant provides for the full CIRP cost in priority to all o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the CoC? The Resolution Applicant has proposed formation of implementation and monitoring committee On and from the NCLT Approval Date, and till the occurrence of the Effective Date, the Corporate Debtor shall be managed by the Implementation and Monitoring Committee. Upon the NCLT Approval Date, an Implementation and Monitoring Committee comprising 3(three) persons of which 1(one) will be RP, 1 (one) will be nominated by the Key Lenders, and 1 (one) will be a member of the Advisory Board as selected by the COC, will be constituted without any further action or omission required from the Corporate Debtor or the Resolution Applicant ("Implementation and Monitoring Committee"). In the Resolution Plan, Schedule 4 for Implementation Provisions is given, where Resolution Plan steps are provided by the Resolution Applicant. Part II, Mandatory Provision of the Plan. Schedule 4 of the Resolution Plan Page 261 Page 278-280 Yes Regulation 35A Where the resolution profesional made a determination if the corporate debtor....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Page 266 Yes Regulation 38(1A) Whether the resolution plan includes a statement as to how it has dealt with the interests of all stakeholders? The Resolution Plan includes statement as to hot it has dealt with the interest of all the stakeholders. The Plan provides details of the settlement proposed with the all the stakeholders Part IV of the Resolution Plan-Financial Proposal of the Resolution Applicant Page 264- 267 Yes Regulation38(2) Whether the Resolution Plan provides: (a) the term of the plan and its implementation schedule? The Resolution Plan provides upfront payment of Rs. 350.00 Lakh to Secured Financial Creditors and payment of Rs. 1000.00 Lakh from recovery of funds from government departments or before 31st March 2020. The payment of Rs. 35.00 Lakh to operational creditors and payment of Rs. 25.00 Lakh unsecured financial creditors is also upfront. (b) for the management and control of the business of the corporate debtor during its term? The Resolution Plan provides for the management and control of the business of corporate debtor during its term. On and from the NCLT Approval Date....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Part IV of the Resolution Plan-Financial Proposal of the Resolution Applicant Part II, Mandatory Provision of Resolution Plan Part II, Mandatory Provision Resolution Plan Page 258 Page 264 Page 261 Page 262 38(3) Whether the resolution plan demonstrates that - (a) it addresses the cause of default. The Resolution Plan provides the cause of default by Corporate Debtor. As per Resolution Plan, the reason for default are high repayment obligation, fluctuation in prices, Bad Debts and funds forfeited by government departments (b) it is feasible and viable. The Resolution Plan was circulated to COC and COC members deliberated on the plan. State Bank of India (56.52% voting share) has team of specialized person for verification of commercial viability of the Plan. They have also checked the feasibility and viability of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....019 is as follows:- "[(b) provides for the payment of debts of operational creditors in such manner as may be specified by the Board which shall not be less than-- (i) the amount to be paid to such creditors in the event of a liquidation of the corporate debtor under section 53; or (ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor. Explanation 1.--For the removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2.--For the purposes of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Ban....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Code; (c) The Resolution Plan has provisions for its effective implementation. The satisfaction of the conditions is discussed below. 28. It is submitted by the RP that the resolution plan has been approved by a vote of 93% of voting share of the financial creditor and therefore, the conditions provided for by Section 30(4) of the Code are satisfied. 29. The provisions of Section 30(2) of the Code are as follows: - The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan- (a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the repayment of other debts of the corporate debtor; (b) provides for the payment of the debts of operational creditors in such manner as may be specified by the Board which shall not be less than the amount to be paid to the operational creditors in the event of a liquidation of the corporate debtor under section 53; (c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan; (d) the implementation and supervision of the resolu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tution of the Committee is given in para no 18 (supra). The terms of the plan and its implementation schedule is stated to be three months from the approval of the plan by the Adjudicating Authority. Apart from upfront payment of Rs. 3.50 crore to secured financial creditors, deferred payment of Rs. 10.00 crores from the recovery of outstanding receivables of government departments and market or fresh contribution of resolution applicant is to be paid to secured financial creditors latest by 31-3-2020. The resolution applicant will also infuse into the Corporate Debtor Rs. 1.00 crore for building infrastructure of the factory, Rs. 3.00 crore towards plant and machinery and Rs. 2.00 crore for working capital requirements. 32. We have discussed above that the requirements under section 31(1) of the Code are satisfied in the present case. In para No. 4 of Form H (supra) the RP has certified that the resolution plan complies with all the provisions of the Code and Regulations and does not contravene any of the provisions of the law for the time being in force. The RP has also certified that the resolution applicant Vaibhav Buildtech Private Limited has submitted affidavit pursuant t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rned counsel for the Resolution Professional was directed to file the computation of the Cash Contribution and the same was filed by way of affidavit dated 17-1-2020 (Diary No. 475 dated 17-1-2020). It is stated in the affidavit that the computation of cash contribution by the Resolution Applicant is approximately Rs. 6 Crore, and thus deposited Rs. 30 lacs, being 5% of the upfront contribution of the Resolution Applicant and that the cash contribution by the Resolution Applicant is as under: Detail of Upfront Contribution as per the Resolution Plan submitted by the Resolution Applicant Amount in Crore Payment to Financial Creditors Rs. 3.50 Crores Payment to Employees and Workmen Rs. 1.25 Crores Payment of CIRP Cost Rs. 0.75 Crores Payment to Unsecured Financial Creditor Rs. 2.25 Crores Other Upfront Commitments anticipated by Resolution Professional Rs. 0.25 Crores Total expected upfront commitment Rs. 6.00 Crores Performance Bank Guarantee Required being 5% Rs. 0.30 Crores Funds Provided by the Resolution Applicant on 31-8-2019 in lieu of Performance Bank Guarantee in account No. 32671242676 of Corporate Debtor Rs. 0.30 Crore....