TaxTMI 
TaxTMI 
2019 (5) TMI 1892
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....ccept the resolution plan approved by the committee of creditors (for brevity "CoC") submitted by the H1 resolution applicant. The resolution plan has been filed by M/ s. G. P. Global Energy P. Ltd. (for brevity "G. P. Global") in the corporate insolvency resolution process (for brevity "CIRP") of the corporate debtor. (ii) C. A. No. 742(PB) of 2019 has been filed by the H1 resolution applicant-G. P. Global with a prayer to grant certain "reliefs and concessions" as mentioned in Appendix-II of the resolution plan dated December 27, 2018. 2. Brief facts of the case necessary for disposal of the abovementioned applications may first be noticed. Oriental Bank of Commerce filed C. P. No. IB-46(PB) of 2018 against M/s. Allied Strips Ltd., under section 7 of the Code. After issuance of notice and due consideration of the reply filed by the corporate debtor, we admitted the petition on March 16, 2018 (annexure A1). As a consequence, the CIRP commenced and moratorium in terms of section 14 was imposed. In pursuance of section 15 of the Code the IRP made public announcement inviting claims on March 21, 2018 (annexure A2). In pursuance of the announcement made the IRP received cl....
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....ntually the last date for the receipt of resolution plan was fixed at October 19, 2018. In the 8th meeting of the CoC held on November 1, 2018 the two resolution plan applicants were invited to present and discuss their plans. Thereafter the CoC asked both the plan applicants to make certain amendments to the plan and the same was agreed upon by the resolution plan applicants. The minutes of the 8th CoC meeting are placed on record (annexure A16). 7. In furtherance of the same a 9th CoC meeting was convened on November 22, 2018 and the revised resolution plans submitted by both the applicants were discussed. Thereafter one of the resolution plan applicant intimated about its decision to withdraw the resolution plan submitted by it and the same was discussed in the 10th meeting of the CoC held on December 6, 2018. The minutes of the meeting is placed on record (annexure A18). Accordingly on the recommendation of the CoC, G. P. Global was notified as the H1 resolution applicant in the CIR process. Having being determined as the H1 resolution applicant, the CoC has held extensive negotiations and consultations with the H1 resolution applicant to amend its plan. Pursuant to the nego....
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....y the Board in priority to the payment 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 resolution plan ; (e) does not contravene any of the provisions of the law for the time being in force ; (f) conforms to such other requirements as may be specified by the Board. Explanation.-For the purposes of clause (e), if any approval of shareholders is required under the Companies Act, 2013 (18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law. (3) The resolution professional shall present to the committee of creditors for ....
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....sub-section (4) of section 30 meets the requirements 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, guarantors and other stake holders 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 insolvency resolution process and the resolution plan to the Board to be recorded on its database. (4) The resolution applicant shall, pursuant to the resolutio....
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....conditions as referred to in sub-section (2) of section 30 have been fulfilled. On its satisfaction the Adjudicating Authority-National Company Law Tribunal is to approve the resolution plan which is to be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. As per section 31(3) of the Code a further provision has been made that after the approval of a resolution plan the moratorium order passed under section 14 would cease to have effect and the RP is under obligation to forward the whole record relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Insolvency and Bankruptcy Board of India to be recorded on its database. The conclusion of the aforesaid discussion is that Adjudicating Authority-National Company Law Tribunal must be satisfied that the resolution plan conforms to the requirements given in section 30(2) of the Code. 14. It is pertinent to notice the mandatory requirements of section 30(2) of the Code for a resolution plan to fulfil. Firstly, the resolution plan approved by the CoC must provide for payment of insolvency resolution proce....
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....nd employees) Rs. 0.50 crore shall be paid up front within 30 days from the cut-off date, but before the final payment to financial creditors, on pro rata basis to the operational creditors (other than workmen and employees) in full and final settlement towards their admitted claims, as per the final claim list given by the resolution professional. (d) Operational creditors (statutory dues) Rs. 0.50 crore shall be paid up front within 30 days from the cut-off date, but before the final payment to financial creditors, on pro rata basis to the operational creditors (statutory dues) in full and final settlement towards the statutory claims admitted by RP. (e) Operational creditors (only workmen and employees) Rs. 1.30 crore shall be paid up front within 30 days from the cut-off date, but before the final payment to financial creditors, on pro rata basis to the operational creditors (only workmen and employees) in full and final settlement towards their admitted claims : 6. Proposal for payment of operational creditors after all the financial creditors are paid (a) The sources of financing the operational creditors. (b) ....
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....Apart from the above, the nature of loan agreements with financial creditors is different from contracts with operational creditors for supplying goods and services. Financial creditors generally lend finance on a term loan or for working capital that enables the corporate debtor to either set up and/or operate its business. On the other hand, contracts with operational creditors are relatable to supply of goods and services in the operation of business. Financial contracts generally involve large sums of money. By way of contrast, operational contracts have dues whose quantum is generally less. In the running of a business, operational creditors can be many as opposed to financial creditors, who lend finance for the set-up or working of business. Also, financial creditors have specified repayment schedules, and defaults entitle financial creditors to recall a loan in totality. Contracts with operational creditors do not have any such stipulations. Also, the forum in which dispute resolution takes place is completely different. Contracts with operational creditors can and do have arbitration clauses where dispute resolution is done privately. Operational debts also tend to be recur....
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.... implementation schedule as provided in the plan reads as under : Steps Implementation of various activity Indicative Schedule from cut-off date 1. Reconstitution of board of directors setting up of management team and control systems completion of definitive documents with bank in consultation/supervision of the CoC until creditors under this plan are fully paid. First month 2. Start-up and revamping of operation of plant and bringing in required working capital 3-6 months 3. Capital expenditure towards the installation of power and gas equipment, machines reconditioning, stores and consumable and others amounting to Rs. 20 crores. The same shall be funded by way of equity of Rs. 8 crores and debt of Rs. 12 crores 9-12 months Further it is also submitted in the resolution plan that a core team of senior management is to be put in place which would be responsible to oversee the implementation of the resolution plan in consultation/supervision of CoC until all dues of creditors under resolution plan are fully paid. 19. The fifth condition requires the RP to confirm that the resolution plan did not contravene any of the provisions of the law ....
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....; (b) the management and control of the business of the corporate debtor during its term ; and (c) adequate means for supervising its implementation. (3) A resolution plan shall demonstrate that- (a) it addresses the cause of default ; (b) it is feasible and viable ; (c) it has provisions for its effective implementation ; (d) it has provisions for approvals required and the timeline for the same ; and (e) the resolution applicant has the capability to implement the resolution plan. 39. Approval of resolution plan.-(1) A prospective resolution applicant in the final list may submit resolution plan or plans pre pared in accordance with the Code and these regulations to the resolution professional electronically within the time given in the request for resolution plans under regulation 36B along with- (a) an affidavit stating that it is eligible under section 29A to submit resolution plans ; . . . (c) an undertaking by the prospective resolution applicant that every information and records provided in connection with or in the resolu....
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....hall be initiated against the interim resolution professional or the resolution professional, as the case may be, for any actions of the corporate debtor, prior to the insolvency commencement date. (8) A person in charge of the management or control of the business and operations of the corporate debtor after a resolution plan is approved by the Adjudicating Authority, may make an application to the Adjudicating Authority for an order seeking the assistance of the local district administration in implementing the terms of a resolution plan. (9) A creditor, who is aggrieved by non-implementation of a resolution plan approved under sub-section (1) of section 31, may apply to the Adjudicating Authority for directions." 23. A perusal of regulation 38 would clearly show that by virtue of mandatory contents of the resolution plan as discussed in the preceding paragraphs in relation to sections 30 and 31 of the Code the requirement of regulation 38 stand fulfilled. Even the requirement of regulation 39 has been satisfied as the RP has submitted that the resolution plan of H1 resolution applicant as approved by the CoC to this Tribunal along with the compliance certifi....