TaxTMI 
TaxTMI 
2020 (9) TMI 521
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.... in terms of the Share Purchase Agreement dated June 24, 2020 and encashment of the demand drafts submitted by Falafal Technology Private Limited as consideration under the Share Purchase Agreement; B. Approve the sale of the identified business undertaking of each of IL&FS Cluster Development Initiative Limited and Skill Training Assessment Management Partners Limited on a slump sale basis free and clear of all encumbrances, liens, security interest and third party claims (including any statutory or tax claims) subject to the completion of, and on the terms and conditions set out in the ICDI BTA dated June 24, 2020 and the STAMP BTA dated June 24, 2020 respectively for a lump sum consideration of INR 1/- each; C. Approve the acquisition of the 100% of the shareholding of each of IL&FS Cluster Development Initiative Limited and Skill Training Assessment Management Partners Limited held by Schoolnet India Limited (formerly known as IL&FS Education & Technology Services Limited) by the Applicant in terms of the IL&FS SPA, free and clear of all encumbrances, liens, security interest and third party claims (including any statutory or tax claims); D. Allow the....
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....e Subsidiary Debt to be paid to the Applicant and IL&FS Employee Welfare Trust as per the Share Purchase Agreement dated 24 June 2020, be deposited/encashed into the relevant escrow/bank account of the Applicant or IL&FS Employee Welfare Trust and that such amount deposited in the relevant escrow/bank account of the Applicant or IL&FS Employee Welfare Trust shall be maintained as interest bearing fixed deposits and not be adjusted or set off against any dues pertaining to any bank and/or financial institution, as the case may be; H. Direct that any Upside Amount received by the Applicant from LEHL as contemplated under the SPA, subject to LEHL realizing an amount in excess of INR 171,62,10,200/- from sale of 100% the equity shares of Schoolnet held by LEHL, be deposited in the escrow/bank account of the Applicant and that such amount deposited shall be maintained as interest bearing fixed deposits and shall not be set off against any dues pertaining to any bank and/or financial institution; I. Direct that the distribution or withdrawal of any other amounts (after transferring amounts as set out in prayer E(i) and (ii) above) from the escrow/bank account of the App....
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.... Further Schoolnet has another subsidiary i.e. IL & FS Skill Development Corporation Limited (ISDC), a joint venture with National Skill Development Corporation Limited (NSDC), in which Schoolnet holds 80.01% and the balance 19.99% is held by NSDC. 7. The Resolution Framework approved by the concerned Board of the group concern and IL & FS have to be submitted to the Hon'ble Justice (Retd.) D. K. Jain, Retired Judge of the Hon'ble Supreme Court who will oversee the resolution process of the group companies in line with the Resolution Framework. 8. The Resolution Framework consists the following steps: a. Inviting Expression of Interest (EoI) on the basis of suitable eligibility criteria. b. Following the receipt of EoI, a Request for Proposal (RFP) will be issued to the eligible Applicants. c. The eligible Applicants will submit their binding financial offers in the form and manner and within the timeline. d. The New Board will evaluate the bids on the basis of categorisation of the company for sale. It consists of Category I Company - where the bidder is willing to assume all liabilities of the company to be sold without any compromise of ....
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....hts and obligations of the Applicant, IEWT and LEHL, shareholders of the Schoolnet, are governed under the Subscription-cum-Shareholders Agreement dated 18.01.2010 (SSHA). As far SSHA, LEHL have pre-emptive rights in respect of shares of Schoolnet i.e. right of first offer and the right to cause the sale of its equity interest in Schoolnet in an offer for sale. LEHL and the Applicant have executed consent cum waiver letters dated 18.12.2018 and 27.06.2019, under which LEHL waived its right of first offer and agreed to monetise its direct equity shareholding in Schoolnet subject to the certain conditions. 12. The Applicant submits that IEWT has also given its consent for sale of shares held by it in Schoolnet subject to acceptance of the terms of the proposed sale being acceptable to it. Further the NSDC as a shareholder in ISDC given its consent for disclosing information in relation to investment agreement by letter dated 19.12.2018. 13. The New Board initiated resolution process in respect of Education Assets by exploring possible sale of Applicant's entire shareholding in Schoolnet and the businesses of STAMP and ICDI on a slump sale basis through a publicly solicited comp....
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....uiring the business undertaking of ICDI and STAMP on slump sale basis and dispensed with the requirement of constituting a CoC in relation to ICDI and STAMP since all the existing loans of ICDI and STAMP (except for the loans availed from IL & FS Financial Services Limited (IFIN)) were proposed to be acquired by CPPL. The New Board approved the revised bid for sale of Education Assets and recommended the same to be placed before Hon'ble Justice (Retd.) D. K. Jain for his approval. Hon'ble Justice (Retd.) D. K. Jain vide his letter dated 05.12.2019 has given the approval. 17. The Applicant issued a letter of intent dated 13.12.2019 (Initial Letter of Intent) and addendum thereto on 23.12.2019 to CPPL identifying it as the successful bidder in accordance with the terms of the RFP. 18. It is submitted, at this juncture, LEHL as a shareholder of Schoolnet expressed its concern regarding the time taken to close the sale of the Education Assets to CPPL and LEHL by its letter dated 22.12.2019 further opined that the consent accorded by it in the consent cum waiver letters expired on 14.12.2019 and the Applicant could not proceed with the sale of Education Assets to CPPL. LEHL also s....
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....oolnet held by LEHL, it shall pay the Applicant 5% of such Upside Amount. C. Schoolnet shall repay debt of INR 73,30,00,000/- advanced by the Applicant to Schoolnet (Promoter Debt) as per the repayment schedule agreed with the Applicant and on the closing date under SPA (Closing date) but in any event not later than 12 months from the closing date, it shall on the best efforts basis replace the Promoter Debt. D. Within 18 months from the closing date or upon realisation of the debt of INR 8,54,00,000/- advanced by the Schoolnet to each of ICDI and STAMP (Subsidiary Debt) whichever is earlier, it shall ensure that the Schoolnet shall repay the Applicant a sum equivalent to 73.90% of the amount so realised (net of tax refund receipts) and E. Provision of employee stock ownership plan up to 40% which would help in improving the employee retention, morale and value creation. 22. The Applicant submits that though the Falafal bid is not received under RFP, it made all efforts to ensure close compliance with the RFP. Based on the guidance provided by the New Board to the Asset Sale Committee (ASC), Falafal bid was assessed and it was found that it is better t....
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....sferred as follows: i. The resolution process cost incurred in the resolution process (Resolution Process Costs) would be deducted from the Upfront Consideration and will be transferred to a designated account for Resolution Process Costs, ii. After Resolution Process Cost, an amount proportionate to IEWT's shareholding in Schoolnet would be transferred to IEWT's account, and iii. Remainder of the amount will be retained in the designated bank account of the Applicant. The Deferred Consideration would be paid within 18 (eighteen) months from the Closing Date, for which post-dated cheques are to be provided by the Falafal on the Closing Date, drawn in favour of the Applicant and IEWT. 27. Upon review Falafal submitted an undertaking dated 21.04.2020 (Falafal Undertaking) according its acceptance to the terms and conditions set out in SPA, ICDI BTA, STAMP BTA and Individual Shareholders SPA, and the side letter for sharing the Upside Amount (Side Letter) and agreed to execute the aforementioned transaction documents within 5 (five) days from the issuance of the letter of intent by the Applicant. 28. Pursuant to receipt of approval of the IL & FS Co....
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.... to STAMP as part of the business undertaking of each of ICDI and STAMP respectively; and e. authorized Schoolnet to approach Yes Bank to obtain the consent of Yes Bank for (a) rolling over the credit facilities aggregating to INR 71,36,00,000/- advanced by Yes Bank to Schoolnet and the credit facility aggregating to INR 7,42,00,000/- advanced by Yes Bank to ISDC; and (b) assumption of the debt including the loan of INR 18,41,00,000/- (advanced by Yes Bank to ICDI) forming part of the business undertaking of each of ICDI and STAMP into Schoolnet. 32. The ICDI Board and the STAMP Board have also acknowledged and accepted the Falafal Bid respectively. 33. The New Board had also resolved to dispense with the requirement of constituting a creditors' committee for each of ICDI and STAMP, since the loans of INR 261,80,00,000/- and INR 122,00,00,000/- availed by ICDI and STAMP respectively from IL&FS Financial Services Limited (IFIN) were not being transferred as part of the business transfers; and authorized each of ICDI and STAMP to approach their existing lenders to obtain their consent to sell the business of ICDI and STAMP on a slump sale basis. Accordingly, ICDI and S....
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....nd outstanding equity shares of Schoolnet; and (b) Schoolnet as the purchaser of the business undertaking of ICDI and STAMP on a slump sale basis respectively. ii. Falafal submitted a demand draft towards the Balance Upfront Consideration with the Applicant; iii. Execution of the: (a) the SPA by Falafal; (b) the ICDI BTA and the STAMP BTA by Schoolnet; and (c) the side letter to the SPA; and (d) the IL & FS SPA and compliance with the conditions as set out therein; iv. Falafal (on behalf of Schoolnet) submitted demand drafts towards the New ICDI H1 Bid amount and New STAMP H1 Bid with ICDI and STAMP respectively. 38. The Applicant submits that to facilitate and implement the resolution process as discussed above for the Education Assets the Applicant incurred certain expenses towards valuation exercise costs and certain professionals, being the Valuers, legal advisors, Financial Transaction Advisors (FTAs), Claims Management Consultant, Resolution Consultant etc. (Professionals), which were appointed by the New Board. These Professionals are to receive an amount of INR 3,71,35,275/- (excluding applicable taxes) from the Upfront Consideration receivable....
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....group concerns, in larger public interest. In the meantime, the new Board of Directors tried to conceive a Resolution framework for the Resolution of the group concerns of the Respondent. Accordingly, a Resolution framework was prepared. The Hon'ble NCLAT by order dated 12.03.2020 permitted the Resolution of IL & FS group to continue as per the procedure suggested by the Petitioner which includes the Resolution Framework. The Resolution Framework provided for "Asset Level Resolution", i.e. an asset by asset solution explored through various methods as a viable option for the Resolution of the Applicant group. The Resolution Framework also provides that where there are no operations or if the cash flows are insufficient to meet the liabilities, the new Board may take steps for such companies to be wound up. 4. The Applicant further submits that the Hon'ble NCLAT by their order dated 11.02.2019, excluded the offshore IL & FS entities from the purview of their order dated 15.10.2018 and directed that the Resolution of offshore IL & FS group entities may be taken up by the new Board under the supervision of Hon'ble Justice (Retd.) D. K. Jain. There was a further direction to the eff....
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....ark Project but in vain. The same led to the Dubai Courts issuing termination notice dated 04.03.2020. 11. The Applicant further submits that due to the termination of Car Park Project, IIDL neither could generate revenue nor have sufficient cash flows to discharge its liabilities. IIDL owed IIDMCC a sum of AED 17,29,191 for services rendered by IIDMCC in respect of Car Park Project. IIDMCC was not in a position to discharge its liabilities to its vendors and employees. IIDMCC has no significant operations and thus there is no separate divestment process for IIDMCC. The outstanding liabilities of IIDL as on 31.12.2019 (not including loans and other payables to shareholders and other group companies) aggregate to AED 59,60,682 which mostly comprise of unpaid salaries of employees, service benefits and vendors payments. IIDL's only investment is its shareholding in PLL which have no value due to termination of Car Park Project. IIDL has no assets except office equipment/furniture. The liabilities of IIDMCC is AED 30,08,331 after adjusting the sale of office premises and a luxury car. This liability is towards employees' salaries, service benefits and vendors due. IIDMCC has virtua....
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....en scenario. The same is recorded as prayed for. In the circumstances, the proposal of the Applicant for initiation of insolvency proceedings of IIDL and IIDMCC is taken on record. 16. The request of the Applicant for exempting them from affixing the stamp on the affidavit and notarising the Application is also granted. ORDER Per : V. Nallasenapathy, Member (Technical) 1. The applicant filed this application seeking the following prayers: a. take on record the proposal for filing application(s) for initiating process of striking off of IIPL Laos Pte. Ltd. in accordance with laws of Singapore; b. exempt the Applicant from affixing the affidavit annexed to this application on stamp paper and notarizing the present Application; 2. Previously, a Petition under Section 241-242 of the Companies Act, 2013 was filed and this Tribunal by an order dated 01.10.2018, ordered supersession of the erstwhile Board of Directors of the Applicant (Respondent i.e. IL & FS in the Company Petition) and constituted a new Board of six directors as Board Members of the Respondent Company with mandate to resolve the debt contagion ploughing the Applicant's group companies. ....