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2019 (3) TMI 1686 - Tri - Insolvency and BankruptcyApproval of Resolution plan - It is averred that as the Resolution Plan submitted by one of the Resolution Applicants viz. M/S Hero Fasion was not in line with the conditions stipulated under Section 30(2) of the I B Code 2016 and 38 (1) (IA) and 2 of the Regulations - HELD THAT - From the plan approval date all inquiries investigation and proceedings whether civil or criminal suits claims disputes interests and damages in connection with the Corporate Debtor or the affairs of the Corporate Debtor pending or threatened present or future in relation to any period prior to the plan approval date or arising on account of implementation of this resolution plan shall stand withdrawn satisfied and discharged. From the date of approval of the Resolution Plan the Resolution Applicant shall be legally authorised to seek appropriate orders from respective authorities/ courts/ tribunals for renewal of licences/withdrawal/dismissal or abatement of the proceeding as the case may be. The Corporate Debtor shall be entitled to carry forward all accumulated business losses and unabsorbed depreciation if any. From the date of approval of the Resolution Plan except as provided in the Resolution Plan all the pending statutory dues including taxes/cess/interest/penalty and other liabilities due to the operational creditors shall stand satisfied/ waived off - The reason for these waivers and abatement is that the Operational Creditors would not get more than that as provided in the Resolution Plan in the event of liquidation of the Corporate Debtor as per the waterfall mechanism provided under Section 53 of the I B Code 2016. Thus the Resolution Plan filed with the Application meets the requirements of Section 30(2) of I B Code 2016 and Regulations 37 38 38(1A) and 39 (4) of IBBI (CIRP) Regulations 2016. The Resolution Plan is also not in contravention of any of the provisions of Section 29A - Resolution plan is hereby approved which shall be binding on the Corporate Debtor and its employees members creditors guarantors and other stakeholders involved in the Resolution Plan including Resolution Applicant. Moratorium rejected - approved Resolution Plan shall become effective from the date of passing of this Order.
Issues Involved:
1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016. 2. Compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016 and relevant regulations. 3. Evaluation and rejection of competing Resolution Plans. 4. Voting and approval process by the Committee of Creditors (COC). 5. Implementation and supervision of the approved Resolution Plan. 6. Reliefs and waivers sought by the Resolution Applicant. Issue-wise Detailed Analysis: 1. Approval of the Resolution Plan under Section 30(6) of the Insolvency and Bankruptcy Code, 2016: The application MA/170/1B/2019 was filed by the Resolution Professional under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 (I&B Code, 2016) for considering the Resolution Plan submitted by M/S. Srinivasa Garments Private Limited jointly with Mr. P. Ramesh & Mrs. Suganthi Ramesh. The application sought the Tribunal's approval of the Resolution Plan and any other appropriate relief deemed fit. 2. Compliance with Section 30(2) of the Insolvency and Bankruptcy Code, 2016 and relevant regulations: The Tribunal confirmed that the Resolution Plan met the requirements of Section 30(2) of the I&B Code, 2016 and Regulations 37, 38, 38(1A), and 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The Resolution Professional certified that the Plan did not contravene any provisions of the law in force, and a Compliance Certificate was provided. 3. Evaluation and rejection of competing Resolution Plans: The Resolution Professional received two Resolution Plans, one from M/S. Hero Fashion and another from M/S. Srinivasa Garments Private Limited. The COC rejected the plan from M/S. Hero Fashion due to several reasons, including the proposed amount being less than the liquidation value, lack of experience in the paper industry, and the plan not being commercially viable. The plan from M/S. Srinivasa Garments Private Limited was considered after revisions and improvements. 4. Voting and approval process by the Committee of Creditors (COC): The revised Resolution Plan from M/S. Srinivasa Garments Private Limited was discussed in the 6th Meeting of the COC. After deliberations and further revisions, the COC approved the plan with a 96.55% majority vote. The voting summary indicated that State Bank of India and Indian Overseas Bank voted in favor, while Canara Bank dissented. 5. Implementation and supervision of the approved Resolution Plan: The Resolution Plan provided for an upfront payment of Rs. 1.25 Crores upon approval and the balance of Rs. 29.20 Crores within 60 days into an escrow account. The remaining Rs. 10 Crores would be paid through preferential shares within six months. The Plan included provisions for the management and control of the Corporate Debtor's business, the appointment of a new Board of Directors, and the amendment of the MOA and AoA. 6. Reliefs and waivers sought by the Resolution Applicant: The Resolution Applicant sought reliefs, including the withdrawal, satisfaction, and discharge of all inquiries, investigations, and proceedings related to the Corporate Debtor prior to the plan approval date. The Corporate Debtor would be entitled to carry forward accumulated business losses and unabsorbed depreciation. Pending statutory dues and other liabilities would be satisfied or waived off to facilitate the successful implementation of the Resolution Plan. Conclusion: The Tribunal approved the Resolution Plan submitted by M/S. Srinivasa Garments Private Limited jointly with Mr. P. Ramesh & Mrs. Suganthi Ramesh, finding it compliant with the I&B Code, 2016, and relevant regulations. The order of moratorium dated 29.05.2018 ceased to have effect, and the Resolution Professional was directed to forward all records to the Insolvency and Bankruptcy Board of India (IBBI). The approved Resolution Plan became effective from the date of the order, and the Resolution Professional was instructed to send a copy of the order to all participants and the Resolution Applicant.
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