TaxTMI 
TaxTMI 
2025 (1) TMI 265
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....#39;) submitted by Mr. Amit Mahendrabhai Shah ('Successful Resolution Applicant') and duly approved by 93.76% of the Committee of Creditors ("CoC") of the Corporate Debtor through E-voting held on 02.09.2022 - 04.09.2022. 2. The Applicant submits that on an application filed by the Operational Creditor, M/s. Sarla Performance Fibers Ltd under Section 9 of the Code. the Corporate Insolvency Resolution process ('CIRP') was initiated against the Corporate Debtor vide Order of this Tribunal dated 02.12.2021, and Mr. Vinit Gangwal was appointed as Interim Resolution Professional ('IRP'). 3. The IRP published a public announcement in Form A inviting claims on 5th December 2021, with the last date for submission of claims on 16th December 2021. Based on the claims received and admitted, the Applicant constituted the Committee of Creditors ('CoC') on 24th December 2021 and held the first meeting of the CoC on 30th December 2021, in which IRP was confirmed as the Resolution Professional ('RP'). The first CoC consisted of the following members: Sr. No. Name of the Creditor Percentage stake in COC 1 Dharmshil Agencies 0.69 2 ....
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....itional time, which was extended to July 9, 2022, with no objections from CoC members. On July 11, 2022, Mr. Arya informed the CoC of his inability to submit a proposal. 9. In the 8th Meeting of the CoC held on 12th July 2022, the CoC invited the Prospective Resolution Applicants to present their plans. The CoC, with 66% of the voting, resolved that the Prospective Resolution Applicants be directed to improve their Financial Bid while giving these observations: (a) The financial offer is required to be improved considering the significant difference between the Financial Bid and the Liquidation Value derived for the Corporate Debtor. (b) That preference will be given for upfront payment proposed in the Resolution Plan rather than a deferred payment structure. (c) The Applicant should consider the value of the security held by the respective Financial Creditors for the distribution of payment towards the secured financial creditors. 10. In the 10th Meeting of the CoC held on 25th August 2022, the CoC considered both the plans and found that although the plans were viable and feasible, the salient difference lay in the following: Amit Mahendr....
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....ion Applicant Assenting (%) Dissenting (%) 1. CA Patel 0.13 94.78 2. Amit Mahendrabhai Shah 93.76 1.15 14. For the resolution plan proposed by Amit Mahendrabhai Shah, out of the 17 CoC members, 6 members with a combined voting share of 93.76% voted in favor, while 3 members with a voting share of 1.15% voted against. The remaining 8 members abstained from voting. 15. In light of the above voting, Mr. Amit Mahendrabhai Shah was declared a Successful Resolution Applicant (SRA) and the SRA furnished the Performance Security Deposit of Rs 1,65,70,000/- (Rupees One Crore Sixty-Five Lakhs Seventy Thousand only) on 08th September 2022. 16. This Tribunal approved an extension of CIRP by 90 days beyond the initial 180 days as per the order dated 09.06.2022. Additionally, an exclusion of 60 days was permitted by the order dated 09.09.2022. This application was filed on 16.09.2022 before the CIRP period was set to expire on 28.10.2022. 17. Brief Background of the Corporate Debtor The Corporate Debtor was incorporated on 16th February 1981 and has been engaged in the business of manufacturing Denim fabric since the year 1995. However, due to the fin....
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....Secured financial creditors (other than those belonging to a class) 111,05,70,144 98,41,68,580 15,71,06,680 14.15 Unsecured financial creditors (other than those belonging to a class) 12,04,32,417 5,89,90,041 15,69,468 1.30 Operational Creditors (Employees) 2,31,44,278 1,83,82,938 29,34,540 12.68 Operational Creditors (Government dues) 1,93,04,127 1,93,04,127 2,27,789 1.18 Operational Creditors (Others) 18,19,22,313 11,53,16,105 13,29,975 0.73 Other Creditors (Including ESIC and Provident Fund) 44,88,464 44,88,464 24,38,387 54.33 Contingency     93,161   Total     16,57,00,000   The Successful Resolution Applicant filed an affidavit dated 25.09.2024 undertaking to arrange additional amount of Rs. 113,98,744/- towards provident fund which was admitted later by the Applicant. B. Sources of funds as per the Plan The SRA will infuse the full amount in 45 days from the date of approval by the Tribunal for settling all claimants as per the Resolution Plan. The amount will be infused through equity contribution, unsecured loans, ....
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....nal Creditors (Employees) (i) As per the Information Memorandum dated August 10, 2022, and subsequent addendums, the Resolution Professional (RP) has received claims amounting to Rs. 2,31,44,278. Out of this, the RP has admitted claims up to Rs. 1,83,82,938. Furthermore, the SRA will inject a total of Rs. 29,34,540 as an upfront amount within 45 days from the approval date. (ii) The Provident Fund and Gratuity would be paid as per the amounts ascertained by the RP. Further, the SRA through Affidavit dated 25.09.2024 submitted before this Tribunal that further amounts admitted by the RP towards Provident Fund during the pendency of the Application would be paid within 45 days from the date of approval of the Resolution Plan. Similarly, the SRA has undertaken to pay the entire amount of gratuity due to Employees and Workmen in the light of the judgement of the Hon'ble NCLAT in Jet Aircraft Maintenance Engineers Welfare Association v. Ashish Chhawchharia, Resolution Professional of Jet Airways (India) Ltd & Ors (2022) SCC OnLine NCLAT 418. F. Treatment of Operational Creditors (Government Dues) As per the Information Memorandum dated August 10, 2022 and sub....
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...., the Corporate Debtor's management will be transferred to a new Board of Directors appointed by the SRA in accordance with the Companies Act, 2013. This new Board will establish a clear organizational structure, policies, and controls to ensure efficient and compliant operations, protect assets, manage risk, maintain accurate records, and emphasize continuous improvement. Control of all tangible and intangible assets will also be transferred to the reconstituted Board immediately upon approval. K. Implementation and Supervision of the Resolution Plan The SRA will be responsible for implementing the Resolution Plan following its approval. On approval of the Resolution Plan by the Adjudicating Authority, the SRA and Financial Creditors, together, shall form an "Implementation and Monitoring Committee" ('IMC') comprising of 4 (four) persons as below: i. One person, being a Chartered Accountant or a Qualified Resolution Professional registered under the IBBI, shall be appointed as the Supervisor by the Financial Creditors; ii. One representative will be appointed by the SRA; and iii. Two representatives will be appointed by the Financial Cr....
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....ner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor and such other requirements as may be specified by the Board." 25. Section 30(6) of the Code enjoins the Resolution Professional to submit the Resolution Plan as approved by the CoC to the Adjudicating Authority. Section 31 of the Code deals with the approval of the Resolution Plan by the Authority if it is satisfied that the Resolution Plan, as approved by the CoC under section 30(4), meets the requirements provided under section 30(2) of the Code. Thus, it is the duty of the Adjudicating Authority to satisfy itself that the Resolution Plan, as approved by the CoC, meets the above requirements. 26. On perusal of the Resolution Plan, it is observed that the Resolution Plan provides for the following: (a) Payment of CIRP Cost as specified u/s 30(2)(a) of the Code. (b) Repayment of Debts of Operational Creditors as specified u/s 30(2)(b) of the Code. (c) For management of the affairs of the Corporate Debtor, after the approval of ....
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....has 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)." 31. The Hon'ble Supreme Court in the matter of Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited, (Civil Appeal No. 8129 of 2019 decided on 13.04.2021) held that on the date of the approval of the Resolution Plan by the Adjudicating Authority, all such claims which are not a part of the Resolution Plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim which is not a part of the Resolution Plan. 32. In view of the discussions and the law thus settled, we are of the considered view that the instant Resolution Plan meets the requi....
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.... such approvals or renewals. 37. All the equity shares and preference shares of the Corporate Debtor would stand extinguished by way of a reduction in the capital of the Company without any payment to the shareholders holding such shares without the requirement of writing the words 'and reduced'. Such reduction of share capital shall not require any further approval, act, or action as required under the Companies Act, 2013 including Section 66 of the Companies Act, 2013 and such cancellation shall not require the consent of any of the creditors or shareholders of the Corporate Debtor. The Resolution Applicant is at liberty to file the necessary application(s) with the Stock Exchanges to get the shares relisted. 38. The Monitoring Committee, as proposed in the Resolution Plan, shall be constituted to supervise and implement the Resolution Plan. 39. In accordance with Section 32A of the Code, the liability of the Corporate Debtor for an offence committed prior to the commencement of the Corporate Insolvency Resolution Process shall cease and the Corporate Debtor shall not be prosecuted for such an offence committed prior to the commencement of Corporate Insolvency Re....