9911796707
TMI Blog2019 (9) TMI 710X X X X Extracts X X X X X X X X Extracts X X X X ..... er approving the Resolution Plan submitted by the successful Resolution Applicant in respect of the Corporate Debtor under Section 31(1) and declare that the same shall be binding on the Corporate Debtor and its employees, members, all creditors (whether admitted or not including contingent or otherwise), guarantors and other stakeholders in the ICR Process of the Corporate Debtor. (b) Pass appropriate directions for grant of reliefs and waivers sought for by the successful Resolution Applicant under Section 6, Part V of the Resolution Plan. (c) Pass such other order/orders as it may deem fit and proper in the facts and circumstances of the case. 2. For the sake of brevity and convenience, it is mentioned herein that: 2.1 CP(IB) No. 190/2018 was filed by Korba West Power Company Limited, the Corporate Debtor under Section 10 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "Code") read with Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 seeking initiation of Corporate Insolvency Resolution Process of Korba West Power Company Limited (hereinafter referred to as "Corporate Debtor") having registered office at F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.2018, who were keen to submit resolution plans for the Corporate Debtor. 3.1 It is stated that the Resolution Professional conducted the 3rd (third) meeting of the CoC on 13.11.2018, wherein, the evaluation criteria proposed for prospective resolution applicants was approved by the members of the CoC. 3.2 Thereafter, the Resolution Professional, acting in compliance of Regulation 36A(1)) of the CIR Regulations by way of an email dated 16.11.2018, provided to the members of the CoC, the provisional list of prospective resolution applicants with his comments who met the Qualification Criteria. The Resolution Professional vide said email intimated the members of the CoC that out of the ten (10) prospective resolution applicants, seven (7) were considered to be eligible as per the Qualification Criteria. 3.3 Similarly, on 21.11.2018, the Resolution Professional provided the Information Memorandum in respect of the Corporate Debtor to all 7 (seven) prospective resolution applicants in the provisional list provided by the Resolution professional, in terms of Section 29 of the Code and Regulation 36B of the CIR Regulations. 3.4 Subsequently, in terms of Regulation 36(A)(12), the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Plan by the CoC, the Resolution Professional issued the letter of Intent dated 06.04.2019 to the successful Resolution Applicant i.e. Adani Power Limited in accordance with the RFRP which was accepted by the successful Resolution Applicant, Adani Power Limited on 09.04.2019 and submitted a bank guarantee/demand draft for Rs. 20 crores on 09.04.2019 as performance security in accordance with the provisions of the RFRP. 5.3 In view of the aforesaid facts and circumstances, the Resolution Professional submits Resolution Plan under section 30(6) seeking its approval in terms of Section 31(1) of the Code. 6. The applicant/the Resolution Professional, deliberating the sequence of events right from calling EoI up to approval of the Resolution Plan by the CoC in its tenth meeting held on 01.04.2019 submitted the Resolution Plan duly approved by the CoC and affirming that he has verified the contents of the Resolution Plan and confirmed that it complies with the requirements envisaged under Regulation 38 of the CIR Regulations as well as Section 30 of the Code, and sought for approval of the Resolution Plan by this Adjudicating Authority. The Resolution Professional has submitted a det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Whether the Resolution Plan gives priority to the amount due to the operational creditors in payment over financial creditors Section 1.2 Yes Regulation 38(1A) Whether the Resolution Plan includes a statement as to how it has dealt with the interests of all stakeholders? Section 1.2 Yes Regulation 38(1B) (i) Whether the Resolution Applicant or any of its related parties has failed to implement or contributed to the failure of the implementation of any resolution plan approved under the Code. Section 1.7 No (ii) If so, whether the Resolution Applicant has submitted the statement giving details of such non-implementation? Section 1.7 No Regulation 38(2) Whether the Resolution Plan provides: (a) The term of the plan and its implementation schedule? Section 9 Yes (b) For the management and control of the business of the Corporate Debtor during its term? Sections 7 and 8 Yes (c) Adequate means for supervising its implementation? Section 8 Yes 38(3) Whether the resolution plan demonstrates that- (a) It addresses the cause of default? Schedule 2 Yes &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is found that amounts provided for the stakeholders under the Resolution Plan as given by the Resolution Professional in its Compliance Certificate, in the form of Form H, are as under: (Amount in Rs. Crores) Sr. No Category of Stakeholder Amount Claimed Amount Admitted Amount Provided under the Plan Amount Provided to the Amount Claimed (%) 1. Secured Financial Creditors 3,349.45 3,346.83 1100 32.84% 2. Unsecured Financial Creditors 1,685.35 1,685.35 1,685.35 100.00% 3. Operational Creditors 291.32 111.45 104.28 35.79% Government Included with Operational Creditors above. Workmen Included with Employees below Employees 0.002253 0.002253 0.002253 100.00% 4. Other Debts and Dues Nil Nil Nil Nil 10. The Resolution Applicant has undertaken insolvency resolution of the Company/ Corporate Debtor in the manner as stated in Section 3 at Page No. 82 of the Resolution Plan under the head - "Treatment of Stakeholders" which is the part and parcel of the Resolution Plan as well as the application. The said Resolution Plan also includes the distribution of financial outlay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lement of claims of the different claimants/stakeholders etc. which is reflected in Section 53 and the priorities listed therein, required to be followed in the Resolution Plan. Section 53(1) notwithstanding anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, the proceeds from the sale of the liquidation assets shall be distributed in the following order of priority and within such period and in such manner as may be specified, namely: - (a) The insolvency resolution process costs and the liquidation costs paid in full; (b) The following debts which shall rank equally between and among the following: - (i) Workmen's dues for the period of twenty-four months preceding the liquidation commencement date; and (ii) Debts owed to a secured creditor in the event such secured creditor has relinquished security in the manner set out in section 52; (c) Wages and any unpaid dues owed to employees other than workmen for the period of twelve months preceding the liquidation commencement date; (d) Financial debts owed to unsecured creditors; (e) The following dues shall rank equally between and among the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tives referred to in sub-sections (6) and (6A) of section 21 and sub-section (5)]; (b) members of the suspended Board of Directors or the partners of the corporate persons, as the case may be; (c) operational creditors or their representatives if the amount of their aggregate dues is not less than ten per cent of the debt. 14. To decide the issue, it will be pertinent to notice the very object of the 'IB Code', 'Resolution' and Role of CoC. The objective of the 'I&B Code' 'The objective of the Insolvency and Bankruptcy Code, 2016 is to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in time bound manner for maximization of the value of assets of such persons, to promote entrepreneurship, availability of credit, and balance the interests of all stakeholders including alteration in the priority of the payments of the government dues, to establish an Insolvency and Bankruptcy Fund and matters connected therewith or incidental thereto. Thus, the preamble of the I&B Code aims to promote resolution over liquidation. The purpose of resolution is for maximiza ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;. It rather facilitates and encourages resolution in several ways. The said objective of the Resolution Plan is affirmed in the decision in the matter of K. Sashidhar v. Indian Overseas Bank & ors. The Hon'ble Supreme Court has observed that National Company Law Tribunal has no jurisdiction and authority to analyze or evaluate the commercial decision of the Committee of Creditors (CoC) to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. Keeping in view such object behind the enactment of the Code, intention of the Legislature is, that priority is to be given to the resolution than liquidation in the larger interests of the public, workmen, stakeholders and the other employees of the Corporate Debtor in the interest of justice and in order to achieve the object of the Code, liquidation of a company can only be as a last resort, wherein, all efforts for brining Resolution Plan failed or it cannot be found workable in the larger public interest. Hence, now the approval of Resolution Plan by this Adjudicating Authority is rule as per the apex court's decision in the matter of K. Sashidhar (supra) as discussed above. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as approved" by the requisite per cent of voting share of financial creditors. Even in that enquiry, the grounds on which the adjudicating authority can reject the resolution plan is in reference to matters specified in Section 30(2), when the resolution plan does not confirm to the stated requirements. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides: (i) the payment of Insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under section 188 of the I&B Code. The powers and functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial creditors ought to or ought not to exercise their commercial wisdom during the voting o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CoC and if being aggrieved by the decision of the CoC, could have approached this Adjudicating Authority, long before the date of hearing i.e. 14.06.2019, when the Resolution Plan is placed before this Adjudicating Authority, for approval. Therefore, the dissenting Financial Creditor, has approached this Adjudicating Authority at the belated stage. Time is of essence in the bankruptcy proceedings. One of the key purposes of the Code is to encourage resolution of the issues in time bound manner so that the time value of money is preserved for maximization of assets by providing a time bound process for insolvency resolution. Further, in view of the fact that the Resolution Plan has been approved by a majority of 68.47% of the Financial Creditors, this Adjudicating Authority has no reason to question the commercial wisdom of the CoC as upheld by the Hon'ble Supreme Court in K. Sashidhar (supra). In view of the above explanations, the objections of the dissenting Financial Creditor, the Corporation Bank are not maintainable. 16. Before proceeding further, it is expedient to discuss Section 30 of the Code, to ascertain whether the Resolution Plan meets the requirements of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant referred to in the first proviso is ineligible under clause (c) of section 29A, the resolution applicant shall be allowed by the committee of creditors such period, not exceeding thirty days, to make payment of overdue amounts in accordance with the proviso to clause (c) of section 29A: Provided also that nothing in the second proviso shall be construed as extension of period for the purposes of the proviso to sub-section (3) of section 12, and the corporate insolvency resolution process shall be completed within the period specified in that sub-section.". Provided also that the eligibility criteria in section 29A as amended by the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 shall apply to the resolution applicant who has not submitted resolution plan as on the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018. (5) The resolution applicant may attend the meeting of the committee of creditors in which the resolution plan of the applicant is considered: Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of creditors unless such resolution applicant is also a financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal proceedings etc. applicable or pending by or against the Company/ Corporate Debtor, as they are the subject matter of the concerned competent authorities having their proper/own jurisdiction to pass any appropriate order as the case may be. Hence on approval of the Resolution Plan, the Resolution Applicant may approach those competent authorities/Courts/Legal Forums/Offices - Govt., or Semi Govt./State or Central Govt., for appropriate relief(s) for appropriate relief(s). 19. The Resolution Applicant has liberty to approach this Adjudicating Authority for appropriate directions/clarifications, as the case may be, in case there is any hindrance in the effective implementation of the Resolution Plan, in accordance with law. 20. It is further directed that: i. The approved Resolution Plan shall come into force with immediate effect. ii. The Resolution Plan shall be subject to the various existing laws in force and shall also confirms to such other requirements as specified by the Board and other Statutory/Competent Authorities as the case may be. iii. The Resolution Applicant shall pursuant to the Resolution Plan approved under section 31(1) of the Code, obtain the necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
