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TMI Blog2020 (3) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... going concern. 1.1 The applicant has also submitted affidavits dated December 12, 2019 and affidavit dated December 31, 2019 and rectified the clerical mistakes made in their petition and the submission of the resolution plan. 2. For the sake of convenience, it is mentioned herein that : 2.1 C. P. (IB) No. 299 of 2018 was filed by the financial creditor, viz., Reliance Commercial Finance Ltd., respondent No. 2 under section 7 of the IB Code seeking initiation of corporate insolvency resolution process against V. S. Texmills P. Ltd., the corporate debtor, having registered office at 342, Govindpura Nadiad Mehmdabad Road, VillKamla, Taluka Nadian, District Kheda, Gujarat-387 320. 2.2 The said C. P. (IB) No. 299 of 2018 was admitted on January 9, 2019 by this Adjudicating Authority and appointed Smt. Bhavi Shreyans Shah, as an interim resolution professional (hereinafter referred to as "IRP"). 2.3 The IRP, so appointed, made public announcement on January 12, 2019 as per the provisions of section 15 of the Code calling upon the claims from the creditors in view of the order dated January 9, 2019 of this Adjudicating Authority. Consequent upon public announcement, the IRP recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll, submitted four (4) addendums dated July 25, 2019, July 25, 2019, September 5, 2019 and September 11, 2019 and the members of the CoC voted and approved the resolution plan dated June 20, 2019 along with the final addendum dated September 11, 2019. The said resolution plan dated June 20, 2019 and the addendum dated September 11, 2019 was placed before the CoC for e-voting in the ninth meeting of the CoC which was convened on October 3, 2019 and thereafter e-voting was conducted from October 4, 2019 to October 5, 2019. The CoC approved the said resolution plan dated June 20, 2019 with addendum dated September 11, 2019 with majority voting share of 92.44 per cent. 6. The RP vide compliance certificate in the form of Form H has submitted liquidation value of the corporate debtor as Rs. 4,63,89,800. 7. Pursuant to the approval of the resolution plan by the CoC under section 30(4) of the Code (as amended on June 6, 2018) as the successful resolution plan, the resolution professional filed the instant application being I. A. No. 664 of 2019 under section 30(6) of the Code seeking its approval for the same in terms of section 31(1) of the Code and regulation 39(4) of the CIRP Regulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 66 Yes 8. Regulation 38(1) Whether a resolution plan identifies specific source of funds that will be used to pay the- Part L (a) insolvency resolution process costs ? Yes (b) liquidation value due to operational creditors ? Yes (c) liquidation value due to dissenting financial creditors ? Yes 9. Regulation 38(1A) Whether the resolution plan includes a statement as to how it has dealt with the interests of all stakeholders ? Minutes of 9th meeting of the CoC and Part L Yes 10. Regulation 38(2) Whether the resolution plan shall provide : (a) the term of the plan and its implementation schedule ; (b) for the management and control of the business of the corporate debtor during its term ; and (c) adequate means for supervising its implementation ? (a) Part L (b) Part M (c) Part N Yes Yes Yes 11. Regulation 38(3) Whether resolution the plan demonstrates that : (a) (a) Yes (a) it addresses the cause of default ? (b) (b) Yes (b) it is feasible and viable ? (c) Part L (c) Yes (c) it has provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... three thousand one hundred ninety two) as set out in part of the resolution plan, based on the information memorandum. * That, as per the information memorandum provided by the resolution professional, there is no amount outstanding due to worker or employee of the corporate debtor. A statement showing the amount of claim and amount proposed to be paid is given below : Name of claim Amount of claim admitted by IRP/RP Amount proposed by RA IRP cost 25,00,000 25,00,000 Financial creditors 16,31,41,624 4,44,00,000 Workers Nil Nil Employees Nil Nil Operational creditors 1,37,73,192 6,00,000 Statutory dues Nil Nil Shareholders NA Nil Total : 17,94,14,816 4,75,00,000 A statement showing sources of funds and applicability of the funds is mentioned hereunder : Application of funds Rs. in lakhs Sources of funds Rs. in lakhs Liabilities to be resolved/settled Internal sources/Retained earnings of resolution applicant and out of revenue generation from the corporate debtor 575.00 (a) Insolvency resolution process cost 25.00 (b) Financial creditors (secured and unsecured) 444.00 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mong the following :- (i) any amount due to the Central Government and the State Government including the amount to be received on account of the Consolidated Fund of India and the Consolidated Fund of a State, if any, in respect of the whole or any part of the period of two years preceding the liquidation commencement date ; (ii) Debts owed to a secured creditor for any amount unpaid following the enforcement of security interest ; (f) any remaining debts and dues ; (g) preference shareholders, if any ; and (h) equity shareholders or partners, as the case may be. (2) Any contractual arrangement between recipients under subsection (1) with equal ranking, if disrupting the order of priority under that sub-section shall be disregarded by the liquidator. (3) The fees payable to the liquidator shall be deducted proportionately from the proceeds payable to each class of recipients under sub-section (1), and the proceeds to the relevant recipients shall be distributed after such deduction. Explanation.-For the purpose of this section- (i) it is hereby clarified that at each stage of the distribution of proceeds in respect of a class of recipients that rank equally, each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of value of assets of the "corporate debtor" and thereby for all creditors. It is not maximization of value for a "stakeholder" or "assets of a stakeholder" such as creditors and to promote entrepreneurship, availability of credit and balance the interests. The first objective is "resolution". The second objective is "maximization of the value of assets of the "corporate debtor" and third objective is "promoting entrepreneurship, availability of credit and balancing the interests". This objective of the I and B Code is sacrosanct. The said objective of the I and B Code is also affirmed by the hon'ble Supreme Court in ArcelorMittal India P. Ltd. v. Satish Kumar Gupta [2018] 211 Comp Cas 369 (SC) wherein the hon'ble Supreme Court observed that (page 464) : ". . . the corporate debtor consists of several employees and workmen whose daily bread is dependent on the outcome of the corporate insolvency resolution process. If there is resolution applicant who can continue to run the corporate debtor as a going concern, every effort must be made to try and see that this is made possible". Resolution plan The "I and B Code" defines "resolution plan" as a plan for insolvency r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hon'ble Supreme Court in its recent judgment in Civil Appeal No. 10673 of 2018 in K. Sashidhar v. Indian Overseas Bank [2019] 213 Comp Cas 356 (SC). Comprising of the hon'ble Justice A. M. Khanwilkar and hon'ble Justice Ajay Rastogi observed that Adjudicating Authority has no jurisdiction to interfere with the commercial wisdom of the CoC. 14. On perusal of the records, it is found that the resolution plan conforms to the criteria as provided under clauses (a) to (f) in section 30(2) of the Code and the CoC approved the resolution plan by 92.44 per cent. majority of voting share. The resolution plan also conforms to such other requirements as may be specified by the Board. On perusal of the resolution plan, it is found that it meets the requirement of section 31 read with section 30(2) of the Code. Therefore, the present application I. A. No. 664 of 2019 is allowed subject to certain observations. To make the provisions clearer, section 30 of the IBC is reproduced here-under : "30. Submission of resolution plan.-(1) A resolution applicant may submit a resolution plan along with an affidavit stating that he is eligible under section 29A to the resolution professio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue 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 financial creditor. (6) The resolution professional shall submit the resolution plan as approved by the committee of creditors to the Adjudicating Authority." 15. However, clause No. (e) of Chapter IV : Assumptions and limitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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