TaxTMI 
TaxTMI 
2022 (10) TMI 1241
X X X X Extracts X X X X
X X X X Extracts X X X X
....fter called as the "CoC") pursuant to the ninth meeting of the CoC held on 14.05.2021 followed by electronic voting which concluded on 02.06.2021. 2. That State Bank of India, a Financial Creditor of the Corporate Debtor, had filed an application under section 7 of the Code, read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, for initiation of the corporate insolvency resolution process (CIRP) against Uttam Galva Steels Limited (Corporate Debtor). 3. That the said application was admitted by this Tribunal, by its order dated 1 October 2020 (Admission Order), in terms of which, Mr. Milind Kasodekar (Registration No. IBBI/IPA- 002/IPN00116/2017-18/10285), the Applicant herein, was appointed as the Interim Resolution Professional (IRP). A copy of the Admission Order is annexed with application as Annexure A. The brief facts leading to the Application are as under: 4. The IRP upon receipt of the Admission Order on 06.10.2020 published a public announcement for initiation of CIRP and invited claims from creditors in Form A on 08.10.2020 in the Free Press Journal (Mumbai edition) (English) and Navshakti (Mumbai edition) (Mara....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n order to extend the timeline for submission of EoI by way of email dated 15.12. 2020. The Applicant On 15.12. 2020, issued an addendum to the invitation for EoI in Form G whereby the deadline for submission of EoI was extended to 22 December 2020. 10. In response to the invitation for EoI, a total of 6 (six) Prospective Resolution Applicants (PRA(s)) submitted their EoI, as set out below: (a) AM Mining India Private Limited; (b) Kotak Investment Advisors Limited; (c) JSW Steel Coated Products Limited; (d) Jindal Steel and Power Limited; (e) International Asset Reconstruction Company Private Limited; and (f) ESL Steels Limited. 11. The third meeting of the CoC was convened on 29.12.2020 via video conferencing in compliance with the CIRP Regulations during which, the CoC deliberated and voted on the approval of the draft Request for Resolution Plan (RFRP) and the approval of the draft Evaluation Matrix (Evaluation Matrix). The CoC also ratified and approved the cost of the data room. In the course of the third meeting of the CoC, the terms of the RFRP were discussed in detail including but not limited to the earnest money ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....meline for completion of the CIRP by an additional 90 (Ninety) days starting from 01.04.2021, since the period of 180 (One Hundred and Eighty) days was expiring on 31.03.2021. 17. The RFRP, 1 (One) draft resolution plan was received, from AM Mining India Private Limited (Resolution Applicant) accompanied by the eligibility affidavit under section 29A of the Code and undertaking in hard copy as well as soft copy on 19.03.2021. 18. The Applicant convened the sixth meeting of the CoC on 20.03.2021 via video conferencing in compliance with CIRP Regulations. During the sixth meeting of the CoC, the resolution plan dated 19.03.2021 was opened in front of members of the CoC and the Resolution Professional and its advisors. The Resolution Applicant was also present at the time of the opening of the said resolution plan. The CoC also approved the budget for appointment of advisor to verify compliance with section 29A, finalised by e-voting which concluded on 24 March 2021 with 91.34% voting share of the CoC. 19. The CoC convened seventh meeting on 01.04.2021 via video conferencing in compliance with the CIRP Regulations. During the seventh meeting the CoC inter alia, discussed and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 39D of the CIRP Regulations; (d) The report prepared on section 29A of the Code prepared by Grant Thornton [Bharat], the agency appointed in the seventh CoC meeting to evaluate compliance with section 29A of the Code; and (e) The transaction audit report dated 12 May 2021 (TAR) prepared by BDO. 24. During the ninth meeting of the CoC, the Applicant informed the CoC that the Resolution Plan is legally compliant with the provisions of the Code, and the regulations thereunder, and the RFRP and the Resolution Applicant is eligible under Section 29A of the Code. Further, BDO India LLP, the bid evaluation advisor appointed by the CoC, informed the CoC that, (i) the Resolution Plan meets the qualitative and quantitative criteria as indicated in the Evaluation Matrix approved by the CoC during the third meeting of the CoC; (ii) the Resolution Plan is feasible and viable and that the revenue and EBITDA projections under the Resolution Plan are achievable and reasonable; and (iii) the Letter of Commitment provided by the Resolution Applicant confirms the eventuality of the Resolution Applicant honouring the proposed commitment under the Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ransactions falling under Sections 43, 45, 49 and 50 of the Code. Further, basis the information presented in the TAR and the management responses incorporated therein, the Applicant concluded that the material presented in the TAR is not sufficient to initiate proceedings under section 66 of the Code. 30. The Applicant further submits that the Resolution Plan submitted is in compliance with Section 30 (2) of the Code and Regulation 38 (A) of the CIRP Regulations. The RP has provided a compliance certificate in "FORM H" as mandated under the Code for seeking approval of the Resolution Plan. 31. The Applicant has also filed the Form H, as per Regulation 39(4) of the CIRP Regulations, 2016 with the Insolvency and Bankruptcy Board of India (IBBI). I. SALIENT ASPECTS OF THE APPROVED RESOLUTION PLAN 32. That the Applicant has set out below, the key terms and conditions of the Resolution Plan: Term of the Resolution Plan 33. The Resolution Plan contemplates that it shall be valid from the date of submission of the Resolution Plan until the Effective Date. The Total Cash Payment shall be made within 60 days from the date on which the Resolution Plan is approved by the Ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....R 1 crore (excluding any workmen covered under (i) above and any Operational Creditors covered under (iii) below); and (iii) following the payments contemplated in (i) and (ii) above, the remaining amount shall be paid to other Operational Creditors who have Admitted Claims of more than INR 1 crore in proportion to their Admitted Claim amounts. The Resolution Plan also provides that the amount payable to Operational Creditors shall not be less than the amount payable to the Operational Creditors (as per their class) in the event of liquidation under section 53 of the Code, or the amount that would have been paid to such Operational Creditor, if the amount under the Resolution Plan had been distributed in accordance with priority under section 53(1) of the Code (whichever is higher). C. The Insolvency Resolution Process Costs (as quantified, to the extent possible, and approved by the CoC) and Standstill Period Costs (as quantified, to the extent possible, and approved by the Monitoring Agency) shall be funded from the internal accruals and cashflows in priority over other debts of the Corporate Debtor. If the internal accruals or cashflows of the Corporate Debtor are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es shall take all necessary actions to delist the Corporate Debtor with effect from the Effective Date. Implementation and supervision of the Resolution Plan 38. The Resolution Plan provides for a Standstill Period which commences from the date on which this Tribunal would approve the Resolution Plan and ends on the Effective Date. During the Standstill Period, a Monitoring Committee and a Monitoring Agency would be constituted for effective implementation of the Resolution Plan and to assist in the day-to-day operations of the Corporate Debtor, respectively. 39. The Resolution Plan provides a list of activities along with timelines to be undertaken thereafter, for implementation of the Resolution Plan. 40. The schedule for implementation of the Resolution Plan is as follows: Actions Timeline Date on which the last of the necessary regulatory approvals are received for implementation of the Resolution Plan T Effective Date At the sole discretion of the Resolution Applicant but within T + 60 Actions specified in Section IX(B) to be undertaken in relation of implementation of acquisition structure as determined by the Resolution Applicant for transfer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ellation of the existing share capital; - Increasing the authorised share capital of the Corporate Debtor to such amounts as may be required for undertaking the Total Cash Payment amount; - Capital Reduction; - The Resolution Applicant and/or its nominees may invest the Equity Infusion by subscribing to the equity shares, preference shares and/or any other Securities of the Corporate Debtor at its discretion; - Pursuant to the above, the Resolution Applicant shall hold 100% (One hundred per cent) of the share capital of the Corporate Debtor and acquire control of the Corporate Debtor; - Dissolution of the existing suspended Board of the Corporate Debtor; - Reconstitution of the Board of the Corporate Debtor by the Resolution Applicant shall reconstitute the Board of the Corporate Debtor on the aforesaid date of dissolution in accordance with Applicable Law; All actions set out in this sub-section (ii) above shall be deemed to take effect simultaneously and the Effective Date shall not occur unless all such actions are consummated. (iii) Pursuant to sub-regulation (3) of regulation 3 of Delisting Regulations, no....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as per the Code Section 29A read with Section 30(1) of the Code In terms of Section 30(1) of the Code, the Resolution Applicant has furnished an affidavit confirming its eligibility under section 29A of the Code Section I (Introduction and Background) An affidavit confirming its eligibility under section 29A of the Code is provided as Annexure 3 of the Resolution Plan, and the relevant undertakings and disclosures is provided as Annexure 1 and Annexure 4A of the Resolution Plan. Compliance of the Resolution Plan under section 29A of the Code has also been independently examined by the Applicant and confirmed to the CoC. Section 30 of the Code Mandatory Contents of the Resolution Plan Section 30(2)(a) of the Code Payment of the Insolvency Resolution Process Cost in priority to the repayment of any other debts of the Corporate Debtor Section IV (Summary Proposal of the Resolution Applicant) Complied Section 30(2)(b) of the Code Details for payment of debts of Operational Creditors that shall not be less than: (i) The amount paid to such creditors in the event of liquidation of the Corporate Debtor (under Section 53 of the Code), (ii) The amount....
X X X X Extracts X X X X
X X X X Extracts X X X X
....egulation 38(1) of the CIRP Regulations Payment of amounts due to Operational Creditors in the Resolution Plan in priority to payments to Financial Creditors; and payment of the Financial Creditors that did not vote in favour of the Resolution Plan in priority over Financial Creditors who voted in favour of the Resolution Plan. Section IV (Summary Proposal of the Resolution Applicant) and Section IX (Implementation Schedule, Supervision of Implementation Plan and Management) Complied Regulation 38(1A) of the CIRP Regulations Statement as to how the Resolution Plan proposes to deal with the interests of all Stakeholders, including Financial Creditors and Operational Creditors, of the Corporate Debtor. Section VII (Treatment of Various Stakeholders) Complied Regulation 38(1B) of the CIRP Regulations Statement as to whether the Resolution Applicant or any of its Related Parties has failed to implement or contributed to the failure of implementation of any other approved resolution plan at any time in the past. Section III.F. (General Information and Information about the Resolution Applicant - Declarations as required by the RFRP) Complied Regulatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion Plan is true and correct and discovery of false information and record at any time will render the Resolution Applicant ineligible to continue in the CIRP, forfeit any refundable deposit, and attract penal action under the Code. Annexure 1 of the Resolution Plan Complied Regulation 39(2) of the CIRP Regulations The Resolution Applicant shall submit resolution plans that are in compliance of the requirements under the Code and the CIRP Regulations along with details of the following transactions (if any): (a) Preferential transactions under section 43; (b) undervalued transactions under section 45; (c) extortionate credit transactions under section 50; and (d) fraudulent transactions under section 66, and the orders, if any, of the adjudicating authority in respect of such transactions Section III.F (General Information and Information about the Resolution Applicant) and Annexure I of the Resolution Plan Complied Regulation 39(4) of the CIRP Regulations Evidence of receipt of performance security required under subregulation (4A) of regulation 36B. Annexure 12 of the Resolution Plan Complied 45. The Applicant submits that the Applicant ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion (1) of section 53 in the event of a liquidation of the corporate debtor. Explanation - For the purpose of this section - (i) it is hereby clarified that at each stage of the distribution of proceeds in respect of a class of recipients that rank equally, each of the debts will either be paid in full, or will be paid in equal proportion within the same class of recipients if the proceeds are insufficient to meet the debts in full; and (ii) the term "workmen's dues" shall have the same meaning as assigned to it in section 326 of the Companies Act, 2013 (18 of 2013). 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) Confirms to such other requirements as may be specified by the Board. 49. Section 30 (4) of the Code reads as follows: "(4) The committee of creditors may approve a resolution plan by a vote of not less than sixty-six percent of voting share of the financial creditors, after considering its ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in Section 30(2) when the Resolution Plan does not conform to the stated requirements. 54. In CoC of Essar Steel (Civil Appeal No. 8766-67 of 2019 decided on 15.11.2019) the Hon'ble Apex Court clearly laid down that the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved. In para 42 Hon'ble Court observed as under: "Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of section 30(2) of the Code, insofar as the Adjudicating Authority is concerned, and section 32 read with section 61(3) of the Code, insofar as the Appellate Tribunal is concerned, the parameters of such review having been clearly laid down in K. Sashidhar(supra)." 55. Further, the Creditors are at liberty to proceed against the Personal Guarantors. The approval of the Resolution Plan does not bar the Creditors to proceed against the Personal Guarantors. 56. In view of the discussions and the law thus settled, the instant Resolution Plan meets the requirements of Section 30....