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TMI Blog2017 (8) TMI 1384X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Synergies Dooray Automotive Ltd. ('SDAL') under Sections 30(6) and 31 of the Insolvency and Bankruptcy Code, 2016 ('IBC') read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ('Regulations') seeking approval of the Resolution Plan, as submitted by Synergies Castings Ltd., as duly approved by the Committee of Creditors in the 2nd meeting of the Committee of Creditors held on 24-06-2017. 2. Brief facts of case, as submitted by the Resolution Professional, which are relevant to the issue in question, are as follows: i. The Tribunal vide its order dated 23-01-2017 admitted the Petition filed by the Corporate Debtor seeking initiation of the Corporate Insolvency Resolution Process, under Section 10 of the IBC, to appoint Applicant herein as the Interim Resolution Professional ('IRP'). As per Section 12 of the IBC, the CIRP period ends on 21-07-2017 (180 days). ii. That pursuant to the above, the Applicant herein issued a public announcement and invited claims from the creditors of the Corporate Debtor as envisaged in the IBC. On receiving such claims, the Applicant herein collated the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Professional to expedite the matter and prepare a Comprehensive Plan by the next date of hearing while listing the matter for hearing on 11-07-2017. vii. Accordingly, the 2nd meeting of the Committee of Creditors was convened on 24-06-2017, wherein, in the Agenda, the only List of Issues to be voted upon was the presentation, consideration and approval of the Resolution Plans submitted by the Resolution Applicants, with or without modifications. The Resolution Plans submitted by SMB Ashes Industries and Suiyas Industries Pvt. Ltd., placed before the meeting held on 24-06-2017 was unanimously rejected by the Members of the Committee of Creditors. However, Resolution Plan submitted by Synergies Castings Ltd. (SCL) was approved by a majority vote of 90.16% (EARC abstained from voting), with certain modifications (duly reflected in the minutes) and the above item was declared as approved/passed by the requisite majority by the Applicant herein. The minutes of the 2nd meeting of Committee of Creditors dated 24-06-2017 has been circulated amongst all stakeholders vide email dated 26-06-2017. So the instant Application is being moved for submission of Resolution Plan under section 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 408.21 lakhs. The same is proposed to be funded by way of induction of long term funds and through the operational accruals of SCL. The gist of scheme and means of finance are tabulated below: Particulars Total (Rs. in Lakhs) Insolvency Resolution Cost 50.00 Payment of EARC 489.00 Payment of AARC 686.75 Payment of MFL 3,791.75 Total Secured Payments 5,017.52 Deferred Sales Tax dues 351.69 Current Liabilities 1.16 Statutory dues 37.84 Total Payment 5,408.21 Means of Financing Total (Rs. In Lakhs) Receivables from other corporate debtors 2,548.26 Internal Accruals from operations 2,859.95 Total 5,408.21 III. Payment plan to Financial Creditors and the Operational Creditors - The plan for making payment of the amount mentioned in Clause 5.1 to financial creditors and other class of creditors has been tabulated below: (Rs. In lakhs) Particulars/Year 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 Total Insolvency Resolution Cost 50.00 - - - - - 50.00 Payment of EARC 163.00 163.00 163.00 - - 489.00 Payment of AARC 228.92 228.92 228.92 - - 686.77 Payment of MFL 1263.92 1263.92 1263.92 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the event of failure on the part of the Company to adhere to make payments to Financial Creditors for an amount and in the manner and in accordance with the terms as envisaged in the scheme, the financial creditors will be entitled to reinstate their dues to the original status as per the admitted claims by the Resolution professional along with the security available to them as on COD. However, the principal outstanding of each lender shall stand reduced by the amounts actually paid by the Company, till such date. vi. The Applicant further undertakes to bring in funds in the form of equity/interest free unsecured loans to finance any shortfall in each generation to meet the repayment obligations and to finance any other financial obligation which may be required for the implementation of this Resolution Plan. vii. Till the completion of the repayment of entire amount of restructured loan payable to the financial creditors, the financial creditors shall have the right to seek copies of audited Annual Financial Statements prepared in accordance with Indian GAAP. viii. The promoter directors would continue to extend their personal guarantees to lenders till the entire repayme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and all CAs are pending for adjudication before this Tribunal. (d) In spite of the objection raised by the Respondent No. l, the IRP/RP steadfastly maintained that as a RP, she does not have power to enter into enquiries regarding the validity of documents or inter se disputes amongst the creditors of Corporate Debtor. (e) It is further alleged that no consideration has been paid by the Respondent No.2 to Respondents No.3. (f) The application is in contravention of the provisions of the IBC, 2016 and the Regulations made thereunder. Section 30 of the Code cast an obligation on the Resolution Professional to examine each resolution plan and has to confirm that the Resolution Plan do not contravene any of the provisions of the law for the time being in force i.e. Section 30(2)(e). (g) Therefore, it is prayed that the application has to be rejected. 7. Heard Ms. Mamta Binani, Resolution Professional along with M/s. Krishnenda Datta, P. Vikram & Nitish Bandary, Advocates; Shri S. Niranjan Reddy, Sr. Advocate, Shri Jyoti Singh, Advocate, Ms. Rubaina Khatoon, Advocate, Shri P. Mohith Reddy, Advocate, Shri Deepak Bhattacharjee, Senior Advocate along with Shri Dishit Bhattacharjee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. (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. 9. As stated supra, the applicant has duly filed the list of committee of creditors, which has been updated from time to time, after due verification, and the same was also placed before the Adjudicating Authority on 30-05-2017. It is stated that AARC hold 12.56%; EARC hold 8.94%; MFL holds 69.23% and SCL holds 9.18%. As per Section 25(2)(h) of the IBC, the applicant has initiated the process of inviting prospective resolution applicants for submissions of resolution plans of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) Amalgamation of Synergies Dooray Automative Limited with Synergies Castings Limited; (b) Payment of Insolvency Resolution Process Cost in priority to all other debts of the Corporate Debtor; (c) Payment to all the Financial Creditors of corporate Debtor in equal instalments over a period of three years, without interest; (d) Payment to Operational Creditors, on interest free basis, of an amount, which is more than the amount payable to them in the event of liquidation of the Corporate Debtor, in a staggered manner over a period of three years, post completion of payments to all the Financial Creditors of the Corporate Debtor; (e) Payment of Statutory dues, in a staggered manner, over a period of three years, on interest free basis in three equal yearly instalments, post completion of payment of the financial creditors of the Company; (f) Continued usage and operations of the facilities of the Corporate Debtor, in the manner, in which they are being presently utilized as the Resolution Applicant is the lessee of all the assets and facilities of the Corporate Debtor against an annual lease rentals of Rs. 1.20 crore; (g) The plan envisages a lesser cash outage, as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution plan in question. We are unanimous in accepting Resolution plan in question as it meets all parameters including legal and moral. 17. In the result, the Company application bearing C.A. No. 123/2017 in CP(IB)No.l/HDB/2017 is allowed with following directions: (a) The resolution plan, as submitted by the Synergies Castings Limited, which is approved by the Committee of Creditors, in its meeting held on 24th June, 2017 with 90.16% vote, in terms of Section 31(1) of the IBC, is hereby approved with following conditions: i. As regards to point No. (9) of the Resolution plan submitted by SCL i.e. Resolution Applicant, the Bench is of the considered view that netting against the receivables is not acceptable and MFL has to first make necessary payments to SCL and SCL can make appropriate payments to MFL as per the Resolution Plan in order to establish the bona fide of both the parties/genuinety of the transactions. ii. The Bench is of the considered view that the debt of the Operational Creditors should be paid first before making any payment to the other financial creditors of the Corporate Debtor considering nature of creditors as well as the quantum of dues involved. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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