TaxTMI 
TaxTMI 
2020 (10) TMI 682
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.... preferred an application under Section 7 of the Code for initiation of Corporate Insolvency Resolution Process against M/s. Kalptaru Steel Rolling Mills Limited ("Corporate Debtor"). The Company Petition (IB) 563 (PB) / 2018 was admitted on 14.08.2018 imposing moratorium under Section 14 of the Code and therein appointed the applicant Mr. Prabhakar Nandiraju as Interim Resolution Professional in respect of the Corporate Debtor. 3. Thereafter, in pursuance of Section 15 of the Code the Interim Resolution Professional made public announcement on 18.08.2018 inviting claims and on receipt of claims from various financial creditors and operational creditors, the Interim Resolution Professional constituted the Committee of Creditors in terms of Section 18 read with Section 21 of the Code. 4. Subsequently, in the 1st meeting of the Committee of Creditors held on 11.09.2018, the Interim Resolution Professional was confirmed to act as Resolution Professional as per the provisions of the Code. The Resolution Professional has convened 10 meetings of the Committee of Creditors up to 07.05.2019. 5. The Resolution Professional has further disclosed that in compliance of Regulation 27 r....
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....H as per Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 along with the application. 10. The resolution plan submitted by M/s. Shiva Ferric Private Ltd. and approved by the requisite majority of CoC has been placed before us seeking our acceptance and approval of the resolution plan in terms of the Code and Regulations framed there under. 11. The break-up of the voting pattern of the Financial Creditors/Members of the Committee of Creditors in approving the Resolution Plan was as under: Sr. No. Financial Creditors Voting Share (%) Voted 1. Andhra Bank 66.13 For 2. APSFC 33.87 Against Total 100 12. That brief contours of the Resolution Plan submitted by M/s. Shiva Ferric Private Ltd. as approved by the CoC along with the amounts provided for the stakeholders under the Resolution Plan is detailed herein below: - Category of Stakeholder Amount Claimed Amount Admitted Amount provide d under the Plan Amount provided to the amount claimed Diss....
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.... as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the resolution plan. Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation. (2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order, reject the resolution plan. (3) After the order of approval under sub-section (1),-- (a) the moratorium order passed by the Adjudicating Authority under section 14 shall cease to have effect; and (b) the resolution professional shall forward all records relating to the conduct of the corporate insol....
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....tors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor. Explanation 1. -For 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 purpose of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor- (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan;] (c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan; (d) The implementation and supervision of....
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....en inter alia confirmed during hearing that the CIRP cost upto the date of approval of resolution plan would be considered on an actual basis. Besides the Resolution Professional has also confirmed in the compliance certificate given in Form H that the Resolution Plan provides for the payment of Insolvency Resolution Process costs. Be that as it may it is made clear that Insolvency Resolution Process cost shall be paid in its entirety by the resolution applicant in priority to other debts of the corporate debtor in terms of Section 30(2)(a) of the Code. 24. As regards compliance of clause (b) of Section 30(2) of the Code, the Resolution Professional has certified that Clause 7 Sl. No. 3 of the resolution plan 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. During hearing, it was placed before us that there are no operational creditors and there are no claims by way of statutory dues. Similarly, it is placed that there are no pending claims by workmen or employees. Nev....
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....solution Professional has confirmed in the compliance certificate given in Form H that Clause 7 of the Resolution Plan provides for the management and control of the business of the corporate debtor. 29. The fourth requirement envisaged by Section 32(2)(d) is that it must provide for the implementation and supervision of the resolution plan. The Resolution Professional has confirmed in the compliance certificate given in Form H that Clauses 12 & 13 of the Resolution Plan provides for adequate means for supervising its implementation. However, in the interest of justice, we direct that the Monitoring Committee be comprised of three members constituting the resolution professional as insolvency professional and two representatives of the resolution applicant, to be chaired by the IP. 30. The fifth and sixth conditions in terms of clause (e) & (f) of sub-section (2) of Section 30 of the Code provide to ensure that the Resolution Plan does not contravene any of the provisions of the law and conforms to such other requirements as may be specified by the Board. 31. In this regard the resolution professional has certified that the said Resolution Plan complies with all the provis....
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....found contrary to express provision of law and goes against the public interest. The object of the Code is to promote resolution and every effort must be made to try and see that resolution is made possible. 37. Accepting the Resolution Plan is advantageous to all the stake holders and amounts to maximisation of the assets of the Corporate Debtor and promotes entrepreneurship and to ensure that the Company continue to function as a going concern. The right of rejection or approval of a plan is with the CoC. In a particular case, what should be the percentage of claim amount payable to one or other 'Financial Creditor' or 'Operational Creditor' or 'Secured Creditor' or 'Unsecured Creditor' can be decided by the Committee of Creditors based on facts and circumstances of each case. What can be screened by this Bench is that whether the plan approved by Committee of Creditors meets the requirements as referred to in sub-section (2) of Section 30 of the Code. 38. In the present case the resolution plan has been approved with 66.13 % voting share well above the statutory requirement of 66 % in terms of Section 30(4) of the Code and has the requisite ....
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....e interest of all the stakeholders. 43. One of the important objectives of the Code is to bring the insolvency Law in India under a single unified umbrella with the object of speeding up of the insolvency process. The whole object is, if a particular management is not in a position to run a company, then instead of the company closing down under this management, a more liquid and a professional management must come to save the company. 44. Insolvency and Bankruptcy Code, 2016 is a complete Code in itself and is exhaustive of the matters dealt with therein. The Code is a comprehensive legislation including both the procedural as well as substantive law. In this regard Hon'ble Supreme Court in the case of M/s. Innoventive Industries Limited vs. ICICI Bank has observed that "it is an exhaustive code on the subject matter of insolvency in relation to corporate entities and others. It is also true that IBC, 2016 is a single unified Umbrella Code, covering the entire gamut of the law relating to insolvency resolution of corporate persons and others in a time bound manner." 45. In the present case with the admission order, CIRP has commenced in respect of the corporate debtor....
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....d secured creditors. Besides it is seen that CoC with requisite majority (above 66%) has taken commercial decision in approving the plan. Under Section 30(4) of the Code, the Committee of Creditors may approve a resolution plan by a vote of not less than 66% of the voting share of the financial creditors. 51. Another objection taken by the dissenting creditor is that the corporate debtor is not a going concern and the intent of the resolution plan is not to revive it, which is absolutely contrary to the letter and spirit of the Insolvency Code. 52. In this regard the Resolution professional in its reply filed on 09.07.2019 contended that 'the resolution plan submitted by the resolution applicant is in compliance with Section 30 of the Code read with Regulation 37 and 38 of the CIRP Regulations and made all the efforts to preserve and revive the corporate debtor.' It is further mentioned that 'the resolution plan contains the provisions for take over of the corporate debtor by the resolution applicant as going concern and amalgamation of the corporate debtor with the resolution applicant pursuant to the provisions of Section 230 of the Companies Act, 2013. 53. T....
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....ove the Resolution Plan submitted by M/s. Shiva Ferric Private Limited under sub-section (1) of Section 31 of the Code. 57. The Resolution Applicant is directed to submit Performance Guarantee for Rs. 5,00,00,000/- (Rupees Five Crores only) in compliance of Regulation 36B(4A) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 within a week from the receipt of this order. 58. We further direct appointment of 'Monitoring Committee' comprised of three members constituting the resolution professional as insolvency professional and two representatives of the resolution applicant, to be chaired by the IP. Resolution Professional (IP) shall be a member thereof at least for three months to monitor and supervise the implementation of the Resolution Plan. We also grant Liberty to the monitoring Committee to apply to the Tribunal for any further direction in order to ensure effective implementation of the plan, if such a necessity arises. 59. In respect of reliefs and concession sought for in the Plan which are beyond the jurisdiction of this Tribunal, liberty is accorded to the Monitoring Committee to pursu....