TMI Blog2018 (9) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... tainly enhance the interest of all the stakeholders and is in the line to achieve the object of the Code. In view of the finding that the resolution plan, as unanimously approved by the CoC, is in accordance with the sub-section 2 of section 30 read with section 31 of the Code and as the Resolution Applicant is not disqualified under Section 29A of the Code and as no infirmity seems to have brought out upon screening of the Resolution Plan; we hereby approve the Resolution Plan under sub-section (1) of section 31 of the Code. - C.A. 360 (PB) 2018 In Company Petition No. (IB)-131(PB)/2017 - - - Dated:- 31-7-2018 - MR. M. M. KUMAR, PRESIDENT AND MR. S. K. MOHAPATRA, MEMBER (TECHNICAL) For The Applicant Company : Mr Yatin Sachdeva and Mr. Sudhir Rastogi, adv. ORDER S.K. Mohapatra, Member This is an application filed by the Resolution Professional under Section 30(6) of Insolvency and Bankruptcy Code, 2016 (hereinafter referred as the Code ) read with Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process of Corporate Persons) Regulations, 2016 seeking approval of the Resolution Plan. The Resolution Plan duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores. 7. The 2nd meeting of CoC was held on 26-10-2017, wherein a resolution plan was submitted on behalf of corporate debtor and Shri Gopal Ramesh Kumar Sales Private Limited with a proposal to invest ₹ 16 Crores. However, the CoC requested them to come up with an improved offer in the next meeting of CoC. Copy of the minutes dated 26.10.2017 has been placed on record. In the meantime, the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 was promulgated on 23.11.2017 incorporating section 29A, under which the corporate debtor became ineligible to submit any resolution plan. 8. The 3rd meeting of CoC was held on 13.12.2017, in which no resolution plan was received by CoC. It was therefore decided that a fresh advertisement for invitation of expression of interest from eligible resolution applicants be issued. The copy of Minutes of 3rd meeting of CoC has been placed on record. Subsequently, advertisement to invite expression of interest was published in Free Press Journal, Mumbai on 27.12.2017 and in response to the advertisement, expression of interest was received from Tawade Patil and Associates on 01.01.2018. Another expression of interest was received f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with demand draft of ₹ 50 lakhs by 16-03-2018. 13. Subsequent to the 6th meeting of committee of creditors, non-binding offer of ₹ 15.75 crores was received from Tawade Patil Associates and of ₹ 17.00 crores from Pacific Frozen Facility Private Limited. The same was circulated to the members of committee creditors. Since these were non-binding offers and were not accompanied with demand draft of ₹ 50 lakhs, the next meeting of committee of creditors scheduled for 18.03.2018 was not held. 14. It is stated that on 19-03-2018, 230 days of the period of corporate insolvency resolution process got completed and the resolution professional filed application for liquidation of the corporate debtor. However, between the date of filing and listing of the matter for hearing, the resolution professional received three resolution plans/ revised offers, including that of Resolution Applicant. Therefore, the Tribunal on 06-04-2018 ordered not to liquidate the company and granted extension of Corporate Insolvency Resolution Period by another 40 days to explore the possibility of a successful resolution. 15. The 7th meeting of CoC was held on 10-04-2018 wherein t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee quantitative parameters. Resolution applicants were also explained that bid amount of all resolution applicants will be disclosed and bidders are free to improve their offers on three parameters and that bid will continue until bidders inform to the chairman that it is their final bid. 20. The bidding started at 7 pm and continued till 1 am for 11 rounds. Summary of bid amounts is a follows: Resolution applicant/ Parameter First Bid Final Bid Pacific Frozen Facility Private Limited Upfront recovery ₹ 7.00 crores ₹ 14.00 crores Future Recovery ₹ 12.25 crores ₹ 15.00 crores Term of Resolution Plan 12 months 4 months Mr. Harshwardhan Patil Upfront recovery ₹ 6.00 crores ₹ 6.00 crores Future Recovery ₹ 18 crores ₹ 18.00 crores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution among Axis Bank and JMF Assets Reconstruction Company Limited to allocate amount available for secured financial creditors in the ratio of 72.5% and 27.5% respectively. 25. Mr Deepak Chaganlal Choudhri and Mr Jitendra Goutamchand Chopra submitted their binding resolution plan to the committee of creditors, which was approved by Committee of creditors unanimously and the following resolution was passed: RESOLVED THAT the Final Resolution Plan submitted to Resolution Professional by Mr. Deepak Chaganlal Choudhri and Mr Jitendra Kumar Chopra and presented to the committee of creditors by resolution professional confirming to the conditions referred in section 30(2) of Insolvency and Bankruptcy Code, 2016 and assessed by committee of creditors for creditability of resolution applicant and for feasibility and viability of resolution plan be and is hereby approved by the Committee, of Creditors. i. Upfront Payment within 30 days of Receipt of the NCLT Order. ii. Balance Payment within 4 Months of the Receipt of the NCLT Order. In addition, Resolution Applicants have proposed to invest ₹ 12 crores for upgradation of plant and machinery and working capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and consolidation of equity shares. c. Resolution applicants has offered resolution amount of ₹ 29 crores and has offered to pay in two instalments: d. Workmen -Dues for 24 Months (estimated liability) (No proof of claim received) 12.39 6.16 6.23 Balance amount is sought to be waived off Wages and any unpaid dues owed to employees other than workmen for the period of 12 months preceding the liquidation commencement date (estimated liability) (admitted claim - ₹ 1.43 lakhs) 1.17 NIL 1.17 100% waiver sought Unsecured Financial Creditors (admitted claim - ₹ 41.61 crores 41.61 NIL 41.61 100% waiver sought. Statutory-Authorities (as per provisional balance sheet as on 01.08.2017) (No Proof of claim received) 0.53 NIL 0.53 100% waiver sought Other Operational Creditors (as per provisional balance sheet as on 01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal dated 26.04.2018 has also been placed on record, which is reproduced below for ready reference: Resolution Professional Certificate I, the undersigned, Parveen Bansal, duly registered Insolvency Professional, registered with IBBI vide Reg. no.-IBBI/IPA-001/IP-00175/2017-18/10344, do hereby certify to the best of my knowledge and belief that: 1. Resolution Applicants - Mr Deepak. Chaganlal Chaudhari resident of CNP No. 114 I, 272/1, Subhash Road, 9th Lane, Jaysingpur - 416101, Maharashtra having the experience and expertise in managing and operating the textile mills, which are in spinning, weaving and processing etc. since 2010 and Mr. Jitendra Kumar Chopra residents of C-2, Swapnil Apartment, Awade Nagar, Ichalkaranji, Kolhapur - 416115, Maharashtra are in the business of yarn manufacturing and fabric processing business since 2009. 2. I have examined the resolution plan received from Resolution Applicants to confirm and verify that the resolution plan provides for and is compliant to sub-clauses (a) to (I) of section 30(2) or The Insolvency and Bankruptcy Code, 2016. 3. I have examined the resolution plan of Resolution Applicants to confirm and ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be made under the Resolution Plan. The CIRP cost would be paid by resolution applicant in priority to any other creditor and the source of funds would be contribution by a resolution applicant. 11. The claims of all the Operational creditors whether received or not during the period of corporate insolvency resolution period is envisaged to be waived off. 12. That the resolution plan has provided for: a. The term of the plan and its implementation schedule; b. The management and control of the business of the corporate debtor during the term of resolution plan shall lie with the resolution applicant and the persons nominated by it for running day to day operations of the Corporate Debtor. c. adequate means for supervising its implementation during the resolution plan. 13. The resolution plan does not contravene any provisions of the law for the time being in force. 14. We have relied on financial information including statements and reports furnished to us after taking a confirmation from the management of the corporate debtor. 15. Any factual information provided herein appears to be accurate, complete and up to date. 16. I have submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvolved in the resolution plan. Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions for its effective implementation. (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. (4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under sub - section (1) or within such period as provided for in such law, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the Resolution Plan conforms to such other requirements as may be specified by the Board. The Resolution Professional has certified in detail that he has examined and verified the Resolution Plan approved by the CoC, in the light of the requirements of the Code and Regulations and that it is compliant to the relevant provisions of the Code and Regulations. The Resolution Professional has placed the Resolution Plan for our approval. 34. It is pertinent to record here that no one has come forward to object the Resolution Plan. However, in terms of section 31(1) of the Code, Adjudicating Authority has also to examine whether the requirements of sub-section (2) of Section 30 have been complied with or not. 35. Firstly, the resolution plan approved by the CoC must provide for the payment of insolvency resolution process cost in a manner specified by the Board in priority to the payment of other debts of the corporate debtor. A perusal of the resolution plan reveals that an amount of ₹ 80 Lakhs has been allocated to meet payment of Corporate Insolvency Resolution Process Cost, which will be paid in priority to any other creditor. The Resolution professional additionall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Resolution Plan. Resolution Applicant has proposed to acquire 90 % of ownership of the corporate debtor after restructuring of share capital / allotment of share. Balance 10% of share capital will continue to be held by public shareholders as detailed in the Plan. Resolution Applicant has also proposed to appoint three directors out of which 1 will be Non-executive Director and 2 will be Executive Directors from the date of approval of resolution plan. Mr Jitendra Kumar Goutamchand Chopra and Mr Deepak Chaganlal Choudhari has been proposed to be appointed as Managing Director and joint Managing Director respectively and Mrs Sharmila Devi J Chopra will be the Non-executive Director on the Board. It has been stated that the objective of resolution applicant is to settle the liabilities and claims of corporate debtors and to resume the production of yarn at the unit. Therefore, we find that the third requirement has also been fulfilled. 38. The fourth condition envisaged by Section 32(2)(d) is that it must provide for the implementation and supervision of the resolution plan. As per the Resolution Plan, the term of the resolution plan will be 4 months and there is provision fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the requirements of Section 30(2) are fulfilled and no provision of the law for the time being in force has been contravened. 43. The second aspect as to whether the resolution plan has provisions for its effective implementation is required to be ensured by the Adjudicating Authority in terms of the proviso to sub-section (1) of section 31 of the Code. 44. It is stated in the Plan that the objective of resolution applicant is to settle the liabilities and claims of corporate debtors to the extent mentioned in the Resolution Plan and to resume the production of yarn at the unit. Resolution Applicant have proposed to appoint three directors out of which 1 will be Non-executive Director and 2 will be Executive Directors from the date of approval of resolution plan. Mr Jitendra Kumar Goutamchand Chopra and Mr Deepak Chaganlal Choudhari has been proposed to be appointed as Managing Director and joint Managing Director respectively and Mrs Sharmila Devi J Chopra will be the Non-executive Director on the Board. Resolution Applicant has also proposed to acquire 90 % of ownership of the corporate debtor after restructuring of share capital / allotment of share. Balance 10% of share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Resolution Plan meets the requirements of Section 30(2) of the Code and that the resolution plan has provisions for its effective implementation. 51. We also grant Liberty to the monitoring committee to apply to the Tribunal for any further direction in order to ensure effective implementation of the plan, if such a necessity arises. 52. As a sequel to the above discussion we are satisfied that the requirements as per the Code and regulations have been complied with. 53. Moreover, the Resolution Plan has been unanimously approved by the CoC and has been submitted in compliance of Section 30 of the Code for approval. Resolution Professional has confirmed that the Resolution Plan is compliant to sub-section (a) to (f) of Section 30(2) of the Code and also comply Regulation 38 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. He has further certified that it has dealt with the interests of all stake holders. 54. Besides there is no objection from any stake holders in respect of approval of the resolution Plan. 55. In absence of any discrimination or perverse decision it is not open to the Adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X
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