TMI Blog2019 (6) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... Because of the latest decision, the scope of any suggestion or alteration in the impugned resolution plan is very limited. As far as the procedure is concerned, in this case, the same has been followed as per the provisions of the Insolvency Code, therefore, the Resolution Plan has to be approved. The Resolution Applicant has submitted an affidavit as required U/s 30(1) of the Code stating that he is eligible U/s 29A of the Code. The Resolution Plan is binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immediate effect and the Moratorium imposed under section 14 shall cease to have any effect henceforth. - MA 1090/2019 in CP No.1562/I&BC/MB/MAH/2017 - - - Dated:- 22-5-2019 - Shri M.K. Shrawat, Member (Judicial) For The Applicant : Advocate Anirudh Purushothaman a/w Advocate Priyanka Mishra, for Resolution Professional, Sr. Counsel Mr. Gaurav Joshi a/w Counsel Mr. Ankit Lohia a/w Mr. Jonathan Jose, Ms. Nisha Kaba i/b Naik Naik Co., for IDFC Bank For The Operational Creditor- Pacific World) : Advocate Neelima Kirve i/b Ganesh Co For The O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Plan on 03.11.2019. Their eligibility under section 29A read with Section 240A(1) of the I B Code has been looked into and an affidavit in that regard has been submitted by the Resolution Applicant and the same has been placed on record. Pursuant thereto, in the 14th CoC meeting dated 26.02.2019, the Resolution Plan was placed on table. 4. After deliberations and modifications in the Plan, in the 17th CoC meeting dated 11.03.2019, the voting was conducted and 87.88% of the CoC members had voted in favour of the resolution plan, thereby approving the Resolution Plan with more than 66% voting as prescribed under the I B Code. 5. The Corporate Debtor is an MSME concern, therefore, it is stated that the erstwhile promoters/ directors of the Corporate Debtor are qualified by the introduction of Section 240A (Application of this Code to Micro, Small and Medium Enterprises) enforced w.r.e.f 06.06.2018, prescribed therein that in spite of anything to the contrary contained in this code, the provisions of clauses (c) (h) of Section 29A shall not apply to a Resolution Applicant in respect of Corporate Insolvency Resolution Process of any Micro, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 Incorporated on 6/02/2003 under Companies Act,1956 5 Regularity Authority Registrar of Companies, Mumbai 6 Resolution Professional Dhiren Shah Reg. No: IBBI/IPA-001/IP-P00220/2017-18/10419. Address- B-102, Bhagirathi Niwas, Near Natraj Studio, Sir M V Road, Mumbai, Maharashtra 400 069. Email : (C) BACKGROUND OF THE CORPORATE DEBTOR Dadi Impex Private Limited ( Corporate Debtor ) is a part of a 25 year old group that was founded in 1987 at Kandla, west coast of India. The Corporate Debtor is to be believed the top exporters of salt from India with strong reputation in Asia. The Corporate Debtor is mainly into the business of export of salt and has business spread across the globe. They have exported salt to more than 30 countries and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total 32,00,000 3,20,00,000 100.00 ( F) LIABILITIES OTHER THAN SHARE CAPITAL AND RESERVE AS PER BALANCE SHEET AS ON 22-05-2018 Particulars Amount Term Loans Secured SBI Car Loan 36,20,372 Capital First Ltd. 5,92,87,848 Tata Capital Finance Service Ltd 2,92,214 Bajaj Finance Ltd 13,61,499 HDFC Bank Ltd 8,61,771 Deutsche Bank 8,48,481 SHORT TERM BORROWINGS Secured Loans Repayable on Demand, from Bank SBI, Cash Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest 1 Deltacorp Pacific Trading LLC Member - Advance 4,91,60,389 - 2 Kompass Oversees Trade Advances Member - Advance 1,31,08,669 - TOTAL 6,22,69,058 ( I) DEBT RECEIVABLE FROM RELATED PARTY Sr. No. Name of the Related Party Relationship Date of Loan granted Nature Outstanding as on 22- 05-2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Mr.Anandprakash Mrs. Manju Choudhari Director/Member SBI 43,80,00,000 17.03.2018 2 Mrs. Manju Choudhari Director/Member SBI Car Loan 50,00,000 02.12.2017 TOTAL 44,30,00,000 (L) ONGOING INVESTIGATION OR PROCEEDING INITIATED BY GOVERNMENT OR STATUTORY AUTHOURITIES Sr. No. Name of Statute Nature of Dues Forum where dispute is pending Period to which the Amount relates Amount involved 1 Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and honesty, openness and respect and with their hard work aim to take Dadi Impex Pvt Ltd to the next level as a trading house. (O) Net Worth of Resolution Applicants Particulars Amt in Crs. Mr. Anandprakash Choudhari 6.14 Mrs. Manju Choudhari 14.31 Total 20.45 (The Net Worth Certificate for both the applicants is attached in the Application.) (P) DETAILS OF RESOLUTION APPLICANTS Sr. No. Particulars Required Status of Resolution Applicants in this regard A Identity Individual B Conviction for any criminal offence during preceding 5 years No such convictions involving Resolution applicants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the operational creditors, 2% of the total amount claimed by them in priority to financial creditor as per Regulation 38 (1) of IBC 2016 as upfront payment. Source : Information Memorandum C A resolution plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors, of the corporate debtor. Regulation 38(1A) Table no 21 on page No. 43 shows the payment to be made to all the stakeholders. D A resolution plan shall provide: the term of the plan and its implementation schedule; the management and control of the business of the corporate debtor during its term; and (c) adequate means for supervising its implementation. Regulation 38(2) The plan covers all the conditions as mentioned in the regulations and the same are given here below in this Resolution Plan. E A resolution plan shall demonstrate that (a) it addresses the cause of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the same there is interest amount which come to ₹ 0.11 crores which is the difference between the amount of limit and amount claimed and admitted during CIRP. The two credit facility has been supported by providing the below list of collateral security. 1) FDR for Approx. ₹ 4.5 crores inclusive of Interest 2) Residential Flat at Lokhandwala 3) Corporate Office at Laxmi Industrial Estate 4) Residential Flat at Metropolis 5) Office at Corporate Park, Gandhidham, Gujarat (iii) Based on the above details, the Resolution Applicant proposes to reduce the limit as follows: a) To reduce the present total limit of ₹ 42.5 crores to ₹ 38 crores by requesting the bank to liquidate the FDR along with accrued interest till March 2019 which is approximately 4.5 crores, which SBI are already in possession of and to consider this as upfront payment on the approval of the Resolution Plan by the Adjudicating Authority. b) To pay ₹ 3.5 crores within next 12 months from the date of approval of Resolution plan by Adjudicating Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not been paid, which totals up to 51.32 lakhs till April 2019. 2. Resolution Applicant proposes to restructure the loan by increasing the amount of EMI and keeping the overall tenure of the loan as unchanged. In this case, monthly EMI will be ₹ 9,32,149/- 3. The payment of EMI is assumed to restart from April 2019 for calculation purpose in the plan. 4. In case of Sale of Jaipur Property, the net sale consideration will be utilized to clear the outstanding loan amount of IDFC first. In case, there is balance left, the same will be utilized for repayment of term loan with SBI. No foreclosure fees will be paid by the Resolution Applicant in such situation. 5. Also the Resolution Applicant propose not to change the status of the Loan account to NPA for non-payment of EMI during CIRP and to maintain the account as Standard Account. 6. Resolution Applicant asks for waiver of penal charges which have arise on account of non-payment of EMI during the CIRP period to IDFC Bank. 7. Based on above we propose to make 100% repayment for the loan of IDFC first. (v) Loan Repaym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.96 4.50 2.85 3 AP Choudhari Promoter/Resolution Applicant - - 0.77 0.77 4 Manju Choudhari Promoter/Resolution Applicant - - 2.65 2.65 5 Neha Mangal Daughter of Promoter/Resolution Applicant - - 0.83 0.83 6 Mehak Choudhari Daughter of Promoter/Resolution Applicant - - 0.18 0.18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.70 3.12 3.18 3.35 3.59 3.83 3.98 0.29 33.28 GRAND TOTAL 14.59 6.70 3.12 3.18 3.35 3.59 3.83 3.98 0.29 42.64 *(subject to para 09 below). (T) PAYMENT SCHEDULE AND CONDITIONS a. Total Consideration Resolution Applicant has offered to ₹ 42.64 crores as total consideration to the Financials as well as Operational Creditors and also towards the unpaid CIRP cost which will be as per actuals. b. Approximate CIRP Cost The Corporate Debtor is run by the Resolution Professi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sr. No. Claim Type Amount Due TOTAL PAID Unpaid % REPAID A CIRP APPROX. CIRP COST - Unpaid 9.36 9.36 - TOTAL - A 9.36 9.36 * - 100% B FC State Bank of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Manisha Dikshit ( Practising Company Secretary) 0.00 0.00 0.00 2% Pacific World Shipping Pte Ltd 9.23 0.18 9.04 2% Scorpio UK Limited 0.35 0.01 0.34 2% Maritime Asia Zircon Pte Ltd 0.25 0.01 0.25 2% New Venture INC 0.71 0.01 0.69 2% Percula Shipping Inc 7.00 0.14 6.86 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate debtors in the below mentioned Order: Sr. No. Order Particulars Amount Claimed Amount paid Remarks 1 First CIRP Cost 9.36 9.36* CIRP Cost Liquidation cost will be paid in full. 2 Second Liquidation Cost 0.50 0.50 3 Third Secured Financial Creditors 48.96 20.14 Balance amount after the payment of CIRP Liquidation Cost, will be paid on pari-passu charge. *(subject to para 09 below) The liquidation value is low and does not cover the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is order) The Constitution of the Board shall at all times comply with the provisions of the Companies Act, 2013 and the SEBI Regulations and LODR applicable to listed companies, subject to any relaxation being available to the company whose Resolution Plan is approved as per the provisions of IBC, 2016. Mr. Anandprakash Choudhari Mrs. Manju Choudhari are supported by their daughters Ms. Mehak Choudhari Ms. Neha Mangal. A full time CEO shall be hired within 6 months of approval of the plan, who will assist Mr. Anandprakash Choudhari for day to day affairs. He shall be paid ₹ 1,50,000/- and Mrs. Choudhari ₹ 50,000/- during the period of 7 years and 3 months. The payment to Mrs. Choudhari is justified because the rental income shall be curtailed for this period. c. Appointment of Key Managerial personnel: These appointments shall be made as and when required to meet the requirements of the operations and regulatory requirements. The Board shall ensure that the Company makes adequate disclosures under Regulation 30 read with Schedule III of LODR and the appointees, being KMPs of the Company shall make disclosures under Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of resolution plan as approved by NCLT, by the new management of the Company b. To provide regular updates to the lenders c. To provide updates, if any, to Insolvency and Bankruptcy Board of India (IBBI) as and when required d. To ensure disbursement of dues to financial and operational creditors as per the approved plan The monitoring agency shall continue to operate until repayment of entire financial liability. (ZA) SALIENT FEATURES OF THE RESOLUTION PROPOSAL I. The Resolution Applicant fulfils the criteria prescribed under section 29A of the Insolvency and Bankruptcy Code (amendment),2017 and Regulation38 (3) of the IBBI (Insolvency Resolution Process for Corporate Persons), Regulations, 2016. II. The Proposal provides for the payment of the cost of CIRP and fee payable to the IRP/RP in terms of Regulation 38 (1) (a) of the IBBI (Insolvency Resolution Process for Corporate Persons), Regulations, 2016. III. The Resolution plan complies with the guidelines in Regulation 39 of the IBBI (Insolvency Resolution Process for Corporate Persons), Regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been brought to our notice that one of the justifications for approval of the Resolution Plan is that the Liquidation Value is less comparing the proposals made in the Resolution Plan. The Procedure as prescribed under The Code is that a Resolution Plan is required to be submitted by a Resolution Application U/s 30 of The Code. On approval, the Resolution Professional is to submit U/s 30(6) the Resolution Plan, as approved by the Committee of Creditors, to the AA. Thereafter, u/s 31, as reproduced supra, AA is to examine the contents of the Resolution Plan. The mandate of this section is that if the AA is satisfied that the Resolution Plan as approved by the Committee of Creditors meets the requirement as referred to in section 30(2), shall by an Order, approve the Resolution Plan. So the prerequisite is that recording of satisfaction by AA is a condition precedent. A satisfaction is to be recorded in writing in the Judgment approving the Resolution Plan. Satisfaction is required to be based upon a conscious decision on examination of the terms of the Resolution Plan. In our humble opinion a thorough study of a Resolution Plan is required before recording ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed to be paid at ₹ 9.36 Crores, which appears to be exorbitant and unfair. The governing body IBBI New Delhi has in one of its disciplinary order has made a similar observation that a resolution Professional is expected to be reasonable in demanding professional charges. Considering the nature of the professional services rendered, it shall be appropriate and reasonable to approve ₹ 2.00 Crores as Corporate Insolvency Resolution Process Cost. The balance surplus shall be appropriated against the liabilities of Operational Creditors to be distributed pari-passu. The Resolution Applicant had made a provision to settle the debts of operational creditors at a uniform rate of 2% which shall be increased proportionately. 10. The third qualification to be executed while implementing the Resolution Plan is in respect of payment of salary/remuneration to the directors. The proposal is to pay a sum of ₹ 3,00,000/- to Mr. A.P. Choudhari monthly and nothing to Mrs. Manju Choudhari. During the period of implementation of this Resolution Plan of 7 years 3 months, this Bench is of the view that Mr. Choudhari be paid ₹1,50,000/- and to Mrs. Choudhari & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject matter expressed by them after due deliberations in the CoC meetings through voting, as per voting shares, is a collective business decision. The legislature, consciously, has not provided any ground to challenge the commercial wisdom of the individual financial creditors or their collective decision before the adjudicating authority. That is made non-justiciable . 12. To conclude, the approval of a Resolution Plan by the CoC is to be accepted in toto by the Adjudicating authority if a 66% voting share approves the said plan. Because of the latest decision, the scope of any suggestion or alteration in the impugned resolution plan is very limited. As far as the procedure is concerned, in this case, the same has been followed as per the provisions of the Insolvency Code, therefore, the Resolution Plan has to be approved. The Resolution Applicant has submi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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