TaxTMI 
TaxTMI 
2019 (10) TMI 1475
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....dvocate and Solicitor Mr. Arjun Sheth, Advocates ms. Vidhi Thakkar, Ms. Krina R. Parikh arid Anuja Saraiya for ARCIL, PCS Mr. Rajesh Lohia for the RP, Mr. Mangesh Vitthal kekre, RP himself. ORDER Manorama Kumari, Member (J) 1. The instant application (IA) No. 224 of 2019 in IA 160 of 219 in IA 340 of 2018 in CP(IB)No. 1188/2018, is filed by the applicant, the Resolution Professional of Corporate Debtor Maruti Koatsu Cylinders Limited (hereinafter referred as Corporate Debtor), under Section 30 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred as IB Code), for submission and approval of the Resolution Plan received from Safire Technologies Private Limited (hereinafter referred as Resolution Applicant) in respect of the Corporate Debtor with the prayer to condone the delay in adoption of the Resolution Plan by the Committee of Creditors (hereinafter referred as CoC) and approval of the Resolution Plan. 2. For the sake of brevity, it is mentioned herein that: I.A. No. 160 of 2019 2.1 I.A. No. 160 of 2019 is filed by the RP with the prayer to allow the exclusion of the period between 31.08.2018 to 22.10.2018 (being the date on which the application fil....
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....2.8 It is stated that Corporate Insolvency Resolution Process (hereinafter referred as CIRP) of 180 days, expired on 22.10.2018 and this Adjudicating Authority vide its order dated 23.10.2018 extended CIRP for a further period of 90 days beyond 180 days. The extended CIRP also expired on 22.01.2019. 2.9 The RP caused publication of Expression of Interest (hereinafter referred as Eol) on 4.11.2018. 2.10 It is stated that RP received a Resolution Plan from M/s. Safire Technologies Pvt. Ltd. BF-4, Mohan Complex, H-Block Market, Ashok Vihar, Phase - I, Delhi 110052 with PAN No. AAJCS3768F (hereinafter referred to as Resolution Applicant) on 14.12.2018 which was negotiated and enhanced upward with modified terms on 10.01.2019 and finally on 01.03.2019 final Resolution Plan with enhanced offer and modified terms along with the addendums of undertaking etc was received. 2.11 It is stated that Resolution Applicant was established in the year 2005 and are dealing in i) Fire Safety & Security Systems which includes Fire Protection, Fire Suppression and Fire Detection and ii) Industrial Cylinders & CNG Cylinders; having a vast experience of 14 years in the field. 2.12 It is stated....
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.... Accordingly, in view of the statement of the Ld. Lawyer appearing on behalf of the Secured Financial Creditor viz. ARCIL, the LA. No. 402 of 2019 stands disposed of. 4. It is stated that RP has examined the Resolution Plan and confirm that it meets the criteria as prescribed under Section 30(2) of the IB Code, annexed with the IA as Annexure-4 and submitted the Compliance Certificate as prescribed in Form H under the Regulations (Copy of Form H annexed with the IA as Annexure-5. It is also stated that an affidavit that Resolution Applicant is eligible u/s 29A of IB Code has also been received. 5. The RP has submitted detailed Table showing the compliances of the Resolution Plan with the mandatory requirements under the Code and CIR Regulations. The Table showing the compliances is given hereunder: No. Section of the Code/Regulation No. Requirement with respect to Resolution Plan Clause of Resolution Plan Compliance (Yes/No) 1. 25(2)(h) Whether the Resolution Applicant meets the criteria approved by CoC having regard to the complexity and scale of operations of business of the CD? Clause No. 7 Resolution Applicant's Profile Yes 2. Secti....
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.... related parties has failed to implement or contributed to the failure of the implementation of the Resolution Plan approved under the Court. If so whether the Resolution Applicant has submitted the statement giving details of such non-implementation. No such finding NA 11. Regulation 38(2) Whether the Resolution Plan provides: a. the term of the Plan and its implementation schedule? b. for the management and control of the business of the Corporate Debtor during its 'terms? c. adequate means for supervising its implementation? Plz refer Page 52 Clause 20 Page 52 Clause 21 Page 53 Yes 12. Regulation 38(3) Whether the Resolution Plan 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? (e) the Resolution Applicant has the capability to implement the Resolution Plan? Clause 16A Pg 41-42 Plz refer Page 44 Plz refer Page 45 Plz refer Page 46 Plz refer Page 46 Yes Yes Yes Yes Yes 13. Regulation 39(2) Whether the RP has filed applications in respect of transactio....
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.... days on Receipt of LOI/Approval from the committee of creditors Rs. 1,00,00,000/-(Rs. One Crore) IIIrd 7.04% of total consideration to Secured FC # Within 15 days on Receipt of Order from the Adjudicating Authority Rs. 1,00,00,000/-(Rs. One Crore) IIIrd Balance 82.40% of total consideration to secured FC Within 90 days from the communication of the effective date Rs. 11,71,00,000/-Rs. Eleven Crores &Seventy One lacs) IVth CIRP Cost As and When payable 40,00,000/- Total: Rs. 14,21,00,000/-(Rs. Fourteen Crores & Twenty One Lacs only The Secured Financial Creditors include Axis Bank, IDBI Bank, Bank of Maharashtra and Arcil. The proposed distribution of Resolution Amount is as under: Sr. No. Particulars Bank of Maharashtra Axis Bank IDBI Bank ARCIL Kotak Bank 1. Charge over company assets YES YES YES YES NO 2. Claim admitted 18.36 27.37 32.37 6.05 2.52 3. O/s amount of the loans granted against the assets of CD 18.36 27.37 32.37 0.79 NIL 4. Sharing proposed 18.36 27.37 32.37 0.79 NIL 5. Sharing Ratio 0.23....
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....0,000 Drona & Jigar Ent. Pvt. Ltd. 7,59,000 7,59,000 Vishnu Sales Corporation 2,69,000 2,69,000 Halol (GIDC) Industries Asso. 22,03,000 22,03,000 Batra Associates Ltd. 13,11,000 13,11,000 The Commissioner of Customs 19,33,88,031 NIL Total 21,75,53,031 2,41,65,000 According to the provisions of Section 30(2)(b) of the Code, the Operational Creditors are entitled to such value as they would have received in the event of the liquidation of the Company under Section 53, which amount is to be paid within 30 days from the approval of the Resolution Plan. As per the assessment of the Resolution Applicant, it is presumed that the value of assets in case of liquidation will not be sufficient to cover the amounts owed to even Secured Financial Creditors of the Company in full as such value of assets in case of liquidation of the Operational Creditors would be NIL. The entire debt due to the Operational Creditors by the Corporate Debtor shall stand satisfied, settled and extinguished, and no claims whatsoever, of any nature, either towards the dues, interest or penalty shall subsist against the Corporate Debtor. 11. Employees a....
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....dues outstanding as on date and that on the date of approval of the Resolution Plan shall stand extinguished. No amount is proposed under the Resolution Plan towards the Statutory Dues. 13. Financial Summary of the Resolution Plan: S No. Particulars Amount Due Payment Proposed Waiver 1. CIRP Cost (As informed) 40,00,000 40,00,000 NIL 2. Operational Creditors (Trade Goods/Services)* 2,41,65,000 NIL 2,41,65,000 3. Employees and Workmen Dues## 7,71,32,000 28,25,000 7,43,07,000 4. Statutory Dues 18,11,000 NIL 18,11,000 5. Secured Financial Creditors 86,69,56,000 14,21,00,000 72,48,56,000 6. Unsecured Financial Creditors NIL NIL NIL 7. Financial Creditors who related Parties and not part of CoC 38,36,000 NIL 38,36,000 Total: 97,79,00,000 14,89,25,000 82,89,75,000 Includes Rs. 19,33,88,031/- payable to the Commissioner of Customs ## Payment proposed to Employees and Workmen confirmed by the RP vide his affidavit dated 26th September, 2019 14. Section 53(1) provides: Notwithstanding a....
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....workmen's dues" shall have the same meaning as assigned to it in section 326 of the Companies Act, 2013 (18 of 2013). 15. Thus, Section 53 of the Code lists the priorities to be given to the beneficiaries of liquidation value of the assets of the Corporate Debtor. The provisions of Section 53 make it amply clear that Operational Creditors are at the end of the list of beneficiaries as the Secured Financial Creditors have edge over the others. 16. The objective of the 'I&B Code' "The objective of the Insolvency and Bankruptcy Code, 2016 is to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in time bound manner for maximization of the value of assets of such persons, to promote entrepreneur ship, availability of credit, and balance the interests of all stakeholders including alteration in the priority of the payments of the government dues, to establish an Insolvency and Bankruptcy Fund and matters connected therewith or incidental thereto. Thus, the preamble of the I&B Code aims to promote resolution over liquidation. The purpose of resolutio....
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....nd that the Resolution Plan confirms to the criteria as provided under clauses (a) to (f) in section 30(2) of the Code and the CoC approved the Resolution Plan by 99.09 per cent majority of voting share. The Resolution Plan also confirms to such other requirements as may be specified by the Board. On perusal of the Resolution Plan, it is found that it meets the requirements of Section 31 r/w Section 30(2) of the Code. Therefore, the present application IA 224 of 2019 in IA 160 of 2019 in IA 340 Of 2018 in CP(IB) No. 118 of 2018 is allowed subject to certain observations. To make the provisions clearer, Section 30 of the IBC is reproduced hereunder: Section 30: Submission of resolution plan: "30. (1) A resolution applicant may submit a resolution plan 1 [along with an affidavit stating that he is eligible under section 29A] to the resolution professional prepared on the basis of the information memorandum. (2) 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 Bo....
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....viso to sub-section (3) of section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub-section." ] 7[Provided also that the eligibility criteria in section 29A as amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 shall apply to the resolution applicant who has not submitted resolution plan as on the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018.]span> (5) The resolution applicant may attend the meeting of the committee of creditors in which the resolution plan of the applicant is considered: Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of creditors unless such resolution applicant is also a financial creditor. (6) The resolution professional shall submit the resolution plan as approved by the committee of creditors to the Adjudicating Authority." 18. However, Chapter 18 Other Reliefs Sought - of the Resolution Plan for immunity from proceedings for actions occurring on or before the date of approval of the Resolution Plan by this Adjudicating Authority cannot ....