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TMI Blog2019 (6) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... ng this Application along with Resolution Plan an Order is hereunder passed as prescribed U/s 31(1) of The Code. 2. The 'Operational Creditor' Percula Shipping & Trading INC had filed a Petition by invoking the Provisions of Section 9 of The Code against the Corporate Debtor Dadi Impex Private Limited read with Rule 6 of The Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules 2016. 2.1. After considering the merits of the case, the said Petition was admitted vide an Order dated 22.05.2018 (CP No.1562/I&BP/NCLT/MB/2017). Initially Mr. Sudip Bhattacharya was appointed as IRP. Pursuant to initiation of Corporate Insolvency and Resolution Process, in the first CoC meeting dated 28.06.2018, the IRP Mr. Sudip Bhattacharya was resolved to be replaced by Mr. Martin Golla to act as the Resolution Professional of the Corporate Debtor. The order of substitution of the IRP was passed on 20.07.2018 by this Tribunal. 2.2 The Applicant submits that on 12.11.2018, Mr. Martin Golla was debarred from practising as an Insolvency professional by the IBBI Disciplinary Committee, therefore, in the 6th CoC meeting, Mr. Dhiren Shantilal Shah was resolved to be appointed as the Reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their parents, will be helping their parents in the business. With the additional help of the continuing staff, customers, etc., the business of the Company continues and shall continue. 6. The salient features of the Resolution Plan are discussed herein below: (A) PRELIMINARY This Resolution Plan is prepared by Mr. A.P. Choudhari & Mrs. Manju Choudhari (Jointly), hereinafter also called as Resolution Applicant for re-acquire of M/S. DADI IMPEX PRIVATE LIMITED, hereinafter also called as Corporate Debtor (CD) for submission before Mr. DHIREN SHAH, an Insolvency Professional, appointed as Resolution Professional for Corporate Insolvency Resolution Process of the Corporate Debtor under Insolvency and Bankruptcy Code, 2016. The Resolution Plan has been prepared based on the information provided in the Information Memorandum (IM), additional information from the Resolution Professional, Public Domain and application U/s 9 of IBC 2016. (B) OVERVIEW OF THE CORPORATE DEBTOR Sr No. Particulars Particulars 1 Name of Corporate Debtor Dadi Impex Private Limited 2 Registered Address 614, Laxmi Plaza, Laxmi Industrial Estate, Off Link Road , Andheri West, Mumbai -4000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,000 11,20,000 3.50 4 Ms. Mehak Choudhari 6,95,332 69,53,320 21.73 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 Credit Account 5,14,84,538 SBI, EPC Account 36,86,87,264 Trade Payables 2,86,30,629 Outstanding Liabilities for Expenses 2,25,99,099 Statutory Dues 51,40,235 Trade Advances 6,76,90,311 TOTAL 61,05,04,260 (G) CURRENT ASSETS AS PER BALANCE SHEET AS ON 22-05-2018 Particulars Amount Trade Receivables 2,19,12,727 Sundry Advances 11,81,269 Trade Receivables 2,08,24,692 BALANCES WITH GOVT. AUTHORITIES GST Refundable 3,36,16,585 Particulars Amount TCS on Motor Car 50,269 TDS for AY 2018-19 2,60,936 Input Service Tax 2,07,13,025 Inventories 48,97,92,700 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jointly Address A/203 Legend Building, Lokhandwala, Andheri (w), Mumbai - 400053 (N) BRIEF WRITE UP ON RESOLUTION APPLICANT Mr. Anand Prakash Choudhari and Manju Choudhari have been married for 38 years and actively engaged in international trade for over 30 years. Mr. and Mrs. Choudhari have traded in many commodities such as salt, iron ore, cement clinker, sulphur, timber, bauxite, soyabean extract, china silk fabrics, etc. Mr. Anand Prakash Choudhari has a net worth of about 6.14 crores and Mrs. Manju Choudhari has a net worth of about 14.31 crores. Mr. Choudhari has been the President of Kandla Timber Association, Kandla Free Trade Zone, Lions Club of Gandhi Dham and many other associations. Mrs. Choudhari has also been the president of Lions Club of Seaside, Mumbai. Mr. Anand Prakash Choudhari is the pioneer of salt exports from India. He has expertise in procurement of the best quality salt and chartering the right vessels to conduct the shipments effectively and efficiently. During their long career, Mr and Mrs Choudhari together have secured clients in over 30 countries around the world and export about 1.2 million tons of salt every year. The government of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation Memorandum B Payment of liquidation value for Workmen Dues Regulation 38(1) There are no workmen dues claims as on date of CIRP. In case of claims of the Operational Creditors, though the liquidation Value is NIL, the resolution applicant has proposed to pay each of 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 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay Rs. 3.5 crores within next 12 months from the date of approval of Resolution plan by Adjudicating Authority which will further reduce the overall credit limit to Rs. 34.5 crores. Resolution Applicant proposes to pay this amount on account of expected GST refund. The process of claiming the refund with the GST department has already been initiated. c) In case, the expected GST refund is delayed and not received within 12 months, then the Resolution Applicant propose to pay the amount of Rs. 3.50 crores in 3 equal instalments with time gap of 6 months each. The interest on the same will be charged at MCLR rate + 3% and paid on regular basis till the total amount is repaid. d) Further the remaining credit loan amount of Rs. 34.5 crores will be partly converted into a term loan of Rs. 5.5 crores for the period of 7 years and the same will be paid along with interest at MCLR rate + 3%. e) Further, EPC limit after the above proposed repayment is Rs. 29 crores which will be further reduced to 22 crores, by making repayment of 1 crores every year for 7 years in the form of quarterly instalment of Rs. 25 lakhs starting June 2019. EPC interest rate will be set at the applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Resolution Applicant proposes to continue to honour the repayment of the loans. The loan taken from Deutsche Bank and Tata Capital has been repaid in full as on date whereas SBI Car Loan, Bajaj Finance Ltd and HDFC Bank Ltd. Loans are still on going. (vi) Payment to Operational Creditors The claimed operational creditors will be paid 2% of the claim admitted as per information provided by the Resolution Professional and the same will be infused by the Resolution Applicant. Any amount in addition to 2% of amount admitted for operational creditors, will be paid from the existing business of the Corporate Debtor. (vii) Rent for the property used by Corporate Debtor Corporate Office of the Corporate Debtor and additional place of business at Ghandhidham has been taken on rent from one of the Resolution Applicant Mrs. Manju Choudhari. The resolution applicant propose to continue to provide these property on rental basis to Corporate Debtor. Proposed Rental amount for Corporate Office will be Rs. 80,000/-* (qualified - subject to para 8 herein below) and for office at Ghandhidham will be Rs. 25,000/- subject to increase by 10% every year. (viii) No Dividend payout ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 Professional as a going concern and there are unpaid expenses incurred after 22nd May 2018 and before 28th February 2019, which amounts to Rs. 9.36 crores (subject to para 09 below). The cost will be paid as and when due during the course of business from the accounts of Corporate Debtor. CIRP cost which is expected to be incurred between the period after approval of Plan by CoC till the plan is approved by Adjudicating Authority will continue to be paid from the accounts of Corporate Debtor. c. Payment to State Bank of India Table above shows balance of Rs. 42.50 crores outstanding which is on account of EPC and CC taken by the Corporate Debtor. As proposed, Resolution Applicant will reduce the overall credit risk with SBI to Rs. 29 crores which will be utilised as work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp;0.14 0.00 0.14 2% Vijay Rungta & Co.(Statutory Auditor) 0.05 0.00 0.05 2% Sr. No. Claim Type Amount Due TOTAL PAID Unpaid % REPAID 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 2% Maritime Asia Zircon Pte Ltd 2.78 0.06 2.72 2% Pacific Gulf Shipping Pte Ltd 0.36 0.01 0.35 2% Clipper Bilk A/S 9.21 0.18 9.03 2% Happie Auntie S.A. 3.00 0.06 2.94 2% Nebula Marine Services Pvt. Ltd. 0.10 0.00 0.10 2% TOTAL C 33.18 0.66 32.52 2% TOTAL 91.50 42.64 54.52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard would be formed within 30 days of the date of approval of Resolution Plan by the Adjudicating Authority and other approvals, if any, required. The new Board shall be accountable for the day to day operations of the Company and shall be bound as per applicable law to protect and preserve the value in the Company. Highlights of the composition of the Board is as below: Sr. No. Name of the Director Category Proposed Monthly Remuneration 1 Mr. AP Choudhari Managing Director Rs.3,00,000/-* (qualified) 2 Mrs. Manju Choudhari Non-Executive Director. Nil* (qualified) (*Subject to para 10 given below in this 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 affair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofessional fees of Rs. 50,000/- (Rupees Fifty Thousand) per month for the first 6 months after passing of the Resolution plan by the Adjudicating Authority. Thereafter the monthly fees shall be Rs.25,000/- (Rupees Twenty Five Thousand) for the rest of the term. The monitoring agency shall have the following responsibilities: a. To supervise implementation 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 Regulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 a "satisfaction" in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs. 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 Rs. 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 Rs.1,50,000/- and to Mrs. Choudhari Rs.50,000/- This saving shall help in day to day running of business as well as comforta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 submitted an affidavit as required U/s 30(1) of the Code stating that he is eligible U/s 29A of the Code. 13. The Resolution Plan is bind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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