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2021 (1) TMI 1133
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....appeared for the Resolution Applicant ORDER [PER: BENCH] 1. IA 661 of 2020 has been filed in CP (IB) No. 453 of 2018 u/s. 30(6) of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "IBC") r.w. Regulation 39(4) of the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 for approval of Resolution Plan of the Corporate Debtor as approved by Committee of Creditors (hereinafter referred to as "CoC") by this Authority u/ s 31 of IBC, 2016. 2. IA No. 759 of 2020 was filed by the Resolution Professional under 30(6) r.w. 31 (1) of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "IBC") r.w. Regulation 39(4) of the IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 for approval of Resolution Plan dated August 28,2020 (Second amended and restated Resolution Plan on September 19, 2020 including an Addendum dated September 23, 2020) (Collectively termed as "Resolution Plan") for Corporate Debtor Company viz. Garden Silk Mills Limited submitted by the Respondent (hereinafter raftered to as " Resolution Applicant"). 3. The facts, in brief, are that the Corporate Debtor was admitted in CIRP by allowing t....
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....ployees) excluding related parties 143,106,753 82,253,253 Operational Creditors (Statutory dues, liabilities including outstanding Governmental Authority dues, Taxes, etc.) 5,029,159,739 4,827,297,551 (including amount admitted on provisional & contingent basis) Operational Creditors (Other than Workmen and Employees and Statutory Dues) but excluding related parties 244,591,031 213,192,038 (including amount admitted on /contingent basis) Other Creditors (Other than Financial Creditors and Operational Creditors) NIL NIL Details of creditors who are related parties (i) Financial (ii) Operational as employee (iii) Operational others - 2,713,632 - - 2,713,632 - Total Claims 26,378,180,284 26,030,100,781 5. Learned Senior Counsel for the Applicant appeared and narrated the basic facts. He drew our attention to the Resolution Plan in detail. Based upon the contents of the Plan, it was submitted that approved Resolution Plan complied with all the requirements of Section 30(2) of IBC, 2016 and r.w. relevant Regulations made there-under. It was also submitted that Resolution Plan had been filed before the expiry period of CIR....
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....Effective Date i.e. shall mean the Approval Date or such other later date if and as may be mutually agreed between the Resolution Applicant and the Steering Committee. Y 5. Corporate Debtor to (and Steering Committee and Monitoring Agency to facilitate) file for delisting of its equity shares from the stock exchanges Y+10 6. Delisting of Corporate Debtor Ona day within Y+90 Business Days 7. Transfer Date 8. Re-constitution of Board 9. Capital Reduction of Corporate Debtor to reduce and cancel Shareholding of Existing Promoters and public share holders 10. Capitalization of the SPV and the Corporate Debtor by Resolution Applicant/ SPV 11. 12. Payment of Other Obligation Discharge to the Financial Creditor and assignment of debts due to the Financial Creditor to the SPV** 13. Merger of SPV into Corporate Debtor and conversion of Corporate Debtor into a private company Any action proposed to be undertaken by the Successful Resolution Applicant for the implementation of the Resolution Plan, will be undertaken by MCPI Polyester Private Limited ("SPV") a wholly owned subsidiary of the Successful Resolution Applicant. The Resolut....
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....lementation of the aforesaid steps and as an integral part of the Resolution Plan, the SPV (transferor company) will merge with the Corporate Debtor (transferee company) ("Merger"). Below are the broad contours of the scheme of amalgamation: 5.2 Any and all assets, liabilities, rights and obligations of the SPV, as the transferor company, will be transferred to and vested in the Corporate Debtor, as the assets, liabilities, rights and obligations of the NPV, as the transferor company, will become the assets, liabilities, rights and obligations of the Corporate Debtor, as the transferee company. 5.3 Upon Merger, inter-company loans and advances will be cancelled and difference on account of the same will credited either to the Capital Reserve or debited to the goodwill, as the case may be. 5.4 The authorized share capital of the SPV, as the transferor company, will be merged with the authorized share capital of the Corporate Debtor, as the transferee company. The Corporate Debtor will be entitled to take the benefit of the stamp duty and registration fees already paid by the SPV, as the transferor company, on its authorized share capital. ....
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....Differential OC Discharge Amount (as defined in the Resolution Plan); and (iii) payment to dissenting Financial Creditor (if any), (hereinafter collectively referred to as the "Adjustment Amounts"). 3. Proposal for Operational Creditors (Workmen and Employees)** INR 8,50,00,000 (Indian Rupees Eight Crore and Fifty Lakh) 4. Proposal for Operational Creditors (Statutory dues, liabilities including outstanding Governmental Authority dues, Taxes, etc.) ** Nil 5. Proposal for Operational Creditors (Other than Workmen and Employees and Statutory Dues)** An ex-gratia amount up to INR 21,00,00,000 (Indian Rupees Twenty One Crore) 6. Proposal for Dissenting Financial Creditors Since there is only one Financial Creditor as per the IM, no provision for dissenting financial creditors has been made. However, in case there is any, such financial creditor shall be paid an amount as prescribed under Section 30(2)(b) of the Code and in priority over payments to assenting Financial Creditors out of the FC Consideration 7. Proposal for other stakeholders (including public shareholders and other creditors) Nil 8. Proposal for Related Parties This R....
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....l the obligations, including of costs, penalty, premium and any other expenses which are required to be incurred in respect of the above shall be subject to the terms of the 'Agreements to Sale' executed in February 2010 in respect of the said 6 parcels of the land including the consideration and other terms stated therein shall continue to bind the land-owners and the Corporate Debtor, as the case may be. In view of the above, it is submitted that the said land- owners are not and shall not be obliged to pay any costs, penalty, premium and any other expenses which are required to be incurred in respect of the said 6 parcels of the land at any time in respect of all the process and procedures to be complied with by the CD under the applicable laws and regulations in respect of conferring the title in favour of the CD. It is also submitted that the said Resolution Plan as submitted in the IA No. 661 of 2020 as on today, when approved by this Hon'ble Authority, shall not create any other or further obligation, whether in monetary terms or otherwise on the part of the Land-Owners in respect of conferring the title in favour of the CD over and above what is stated in the sa....
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....licant that costs of the transfer including any penalty, premium and other expenses in relation there to will be borne by the corporate debtor and such transfer, thereafter, shall be binding on the land owners. We, accordingly, approve this arrangement. 14. As regards to the Relief and concessions sought by the Resolution Applicant which have been mentioned in Annexure 4 of Resolution Plan, following justifications for approval or sanction by Adjudicating Authority of the same are given as under : A. JUSTIFICATIONS FOR RELIEFS AND CONCESSIONS SOUGHT IN ANNEXURE - 4 TO RESOLUTION PLAN (@Pg549 of the captioned Application) The reliefs and concessions sought are restricted to abatement and extinguishment of all previous debts and claims against the Corporate Debtor. The Resolution Plan and concessions and waivers sought therein are not contrary to law. No reliefs, licenses, entitlements of the Corporate Debtor should be terminated by reason of the Corporate Insolvency Resolution Process of the Corporate Debtor (CIRP). The resolved Corporate Debtor (Resolution Applicant) should be entitled to all benefits which the Corporate Debtor was entitled to prior to CIRP, wh....
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....hearing, Counsel on behalf of STML / Ex-Promoters of the Corporate Debtor has conceded to this dispensation. As explained in detail in Section 8.2.1 of the Resolution Plan, it is submitted 4 (four) plants critical for the continuance of the operations of Corporate Debtor have been set-up and run on the lands owned by STML and as such free, uninterrupted, and continuous access to these plants (and for that purpose grant of this concession) is critical to maintain the status-quo to enable the Corporate Debtor to maintain its 'going concern' status. The dispensation is sought for a period of 12 (twelve) months. It is submitted that this concession is subject the contractual rights of the parties, but not to be exercised in any manner to defeat the purpose of the resolution. This is because termination / discontinuation of these contracts would be detrimental to the CD. 3.5/ 3.6 (@Pg 551 / 553 of the Application) The reliefs and concessions sought are restricted to abatement and extinguishment of all previous debts and claims against the Corporate Debtor. Further, the resolved Corporate Debtor (Resolution Applicant) should be entitled to all benefits which the Corporat....
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....tments. These are standard and are in line with the settled legal position that taxes, whether crystallized or not are operational debt and upon approval of the resolution plan would stand extinguished. 8.3 During the hearing, the Counsel appearing for the ex-promoters has agreed to this concession. Substantial payment of the purchase consideration has been made to recorded owners / ex-promoters. The Corporate Debtor is in possession for the last more than 10 (ten) years and altered its position and incurred huge expenses in construction of building and installation of plant & machinery on the said 7 (seven) land parcels. The Resolution Professional has received an undertaking from the ex-promoters that necessary documents will be executed. It is requested that these undertakings be recorded in the order of the Hon'ble Tribunal The object of seeking this concession is to maintain the 'going-concern' status of the Corporate Debtor. This relief is claimed in aid of the implementation of the Resolution Plan. The Hon'ble Tribunal is therefore empowered under the proviso to Section 31(1) of the Code to grant this concession. 8.4 / 8.5 / 8.6 / 8.7 The ob....
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....f merger, amalgamation and demerger." To this extent the scheme of amalgamation that is sought to be approved in the present Application is not a scheme for the purposes of Section 230-232 of the Companies Act, 2013, but instead a resolution plan that the Hon'ble Tribunal may approve under Section 31 of the Code. 2. Relief in Prayer (d) of the Application (@Pg 20 of the Application): Regulation 3 (3) of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (Delisting Regulations) expressly states that the said regulations would not apply to any delisting done pursuant to the terms of a resolution plan approved by the Hon'ble Tribunal. To this extent, the Hon'ble Tribunal is empowered to order the delisting of the shares of the Corporate Debtor, subject to compliance with the provisions of Regulation 3 (3) of the Delisting Regulations. The Resolution Plan contemplates a specific procedure for delisting of the shares under Clause 1.1.1 of Annexure-2 to the Resolution Plan (@ Pg 542 to the Application). Further, in the present case, no exit price is payable to existing public shareholders as the liquidation value due to such sha....
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.... Resolution Applicant. 18. We are further of the opinion that Resolution Applicant of the corporate debtor will have all liberty to approach or may approach the concerned Statutory/ Competent Authority for any concession, waiver or exemption as per the applicable laws. We further clarify that approval of the Resolution Plan does not mean automatic waiver or abetment of legal proceedings, if any, which are pending by or against the Corporate Debtor as those are the subject matter of the concerned Competent Authorities having their proper/ own jurisdiction to pass any appropriate order as the case may be as per the provisions of relevant statues. We further hold that resolution applicant or the Corporate Debtor has full liberty to approach Competent Authorities for any concession relief or dispensation as the case may be as and effective implementation of the Resolution Plan. 19. Apart from the above observations and directions, it is further directed that : 19.1 The approved 'Resolution Plan' shall become effective from the date of passing of this order. 19.2 The order of moratorium dated 24 June, 2020 passed by this Adjudicating Authority....