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TMI Blog2020 (6) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... n Power Supply Limited ("WPSL") and Dasve Retail Limited ("DRL"). The Applicant mainly has prayed for the following:- 1.1 Direction by this Bench for reconciliation of the List of Creditors of LCL, WAML and DCCL by the respective Resolution Professionals appointed under CIRP. 1.2 Consolidation of CIRP of LCL, WAML and DCCL and submission and approval of one Consolidated Resolution Plan in respect of all the three group companies. 2. The Corporate Insolvency Resolution Process ("CIRP") of LCL was initiated upon the Admission of the Company Petition, filed by Raj Infrastructure Development (India) Private Limited ("Operational Creditor"), under the Order dated 30th August 2018 passed by this Hon'ble Tribunal. 3. Subsequent to the "Admission" of the above-mentioned Company Petition, another Petition by the Operational Creditor was Admitted by a different Bench of this Hon'ble Tribunal against WAML on December 20, 2018 in CP No. 1757/IB/NCLT/MAH/2018. 4. Then, on a Petition under section 9 of the Insolvency and Bankruptcy Code, 2016 ("Code") filed by Highbrow Audio Visual Services Private Limited came to be admitted against DCCL. 5. LCL was incorporated under Companies Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The contract under which the infrastructure is managed could cease to have any force and effect after LCL's Resolution/Liquidation and would thus leave WAML as an entity without any business or revenue stream. It is further submitted by the Applicant that the Lenders of WAML had provided the Loan to WAML for the purposes of funding the payment of the security deposit payable to LCL under the terms of the Concession Agreement executed between WAML and LCL. It is submitted that the payments proposed to be made by WAML to LCL under the terms of the Concession Agreement would be utilized for the repayment of the debt by LCL to its Financial Creditors. LCL had also provided a corporate guarantee towards the repayment of the entire Debt owned by WAML to its lenders. Also, the entire shareholding of WAML has been pledged in favour of its lenders by LCL. 13. The DCCL, undergoing CIRP since 5-2-2019 does not have any Financial Creditor as the property belongs to LCL and its sole business is to operate the Convention Centre located in the Lavasa City. LCL owns the property in which DCCL is carrying out its business operation. Pursuant to the cancellation of Unregistered Lease Deed, DCCL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Resolution of WAML should be consolidated with that of LCL. However, DCCL, a 100% subsidiary of LCL who is maintaining the Dasve Convention Centre leased by it from LCL through an Unregistered Agreement dated 30-9-2010 through the Resolution Professional mentioned before this Bench that it wants an independent Resolution of DCCL. Here it may be noted that even the unregistered Lease has been cancelled by LCL. 18. FINDINGS :- 18.1 It appears from the facts mentioned above that lack of consolidation of the CIRPs of these Corporate Debtors viz. WAML and DCCL which are already under Insolvency and Resolution of the Debt of WPSL and DRL can only happen along with the LCL, who is the Corporate Debtor and owner of the Township. Any stand-alone Resolution does not seem to be possible and would therefore defeat the objective of the Code, which is to maximise the value of the Corporate Debtor. In case of DRL and WPSL, Resolution of its Debt is directly linked to the Resolution of LCL. The Debt of DRL and WPSL on a stand-alone basis can never happen and only when it is consolidated with LCL, that Resolution may happen. However, this Bench is aware that DRL and WPSL is not undergoing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stry of Corporate Affairs, the details indicate common directorship between the group entities. III. Common Assets: WAML, DCCL, WPSL and DRL operate a common set of assets and office infrastructure owned by LCL. DCCL is/was in the business of maintaining a Convention Center on premises leased by LCL. WAML's business relates to, inter alia, maintaining the transport infrastructure at LCL's Hill Station Township. DCCL, WAML, WPSL and DRL also reflect that relevant personnel and office infrastructure are common. IV. Common Liabilities: The entire Financial Debt of WAML, DRL and WPSL is guaranteed by LCL and the claims of Financial Creditors in this regard have already been admitted by the Resolution Professional of LCL. V. Inter-dependence: Taking into account the business of LCL, WAML, DCCL, DRL and WPSL as well as the agreements executed between them, it is evident that there is a substantial inter-dependence amongst each other. The business of each of these are inter-linked and intertwined to the extent that the fate of WAML, DCCL, DRL and WPSL depends greatly on the outcome of LCL. VI. Inter-lacing of Finance: As far as WAML is concerned, there was a financing arra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Creditors in this respect have already been admitted by the Resolution Professional of LCL. XII. Singleness of Economic Units: The group is known by its brand name "Lavasa'. Therefore, the entire economics of the group revolves around this brand name as the businesses of these entities are interdependent. The group as a whole, therefore, has a common economic feature to sustain and promote the business operation. The entire purpose of incorporation of each of these entities is towards the creation, management and maintenance of a unified entity i.e. "Lavasa Hill Township" XIII. Common Financial Creditors: The entire Debt of WPSL (100% subsidiary of Lavasa) has been admitted as Financial Debt of Lavasa. Further, the Financial Creditor of WPSL (L&T Infrastructure Finance Company Limited) is also Creditor of Lavasa. DRL (100% subsidiary of Lavasa) has one Financial Creditor (Central Bank of India) which is also the Financial Creditor of Lavasa Corporation Limited. XIV. Common Group of Corporate Debtors: There will be no increase in the total Financial Debt to be resolved on account of the proposed consolidation. The entire Financial Debt of WAML, DRL and WPSL is guaranteed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, it is a fit case for where the Resolution of DRL be linked and decided with LCL. However, since DRL is not under CIRP "Consolidated" CoC of LCL, WAML and DCCL where the sole Creditor of DRL, i.e. a Member, may discuss their issue and take a call on consolidating it with the Consolidated Resolution Plan. 21. As far as WPSL is concerned, it is a wholly-owned subsidiary of LCL and is not undergoing CIRP. It has only one Financial Creditor, i.e. L&T Infrastructure Finance Company Limited. WPSL is a 100% subsidiary of LCL and the infrastructure is not owned by WPSL but is rather owned by LCL. L&T is one of the Applicants and has confirmed that it would prefer its Financial Debt to be resolved as consolidated Resolution Plan of LCL. The Corporate Guarantee and Security has been provided by LCL to the lender of WPSL. The Resolution Professional of LCL mentions that the Debt of L&T has already been Admitted in case of LCL. In view of this, this Bench is of the view that the Resolution of Debt of WPSL like that of DRL be carried out in terms of consolidated Resolution Plan of the LCL. 22. It is clear from the above that the fate of each of the 100% subsidiaries of LCL viz. WAML, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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