TMI Blog2020 (9) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... when required by the company in the ordinary course of business - The Resolution Applicant has filed the Affidavit stating that at the time of submission of Resolution Plan and thereafter an additional affidavit has been filed which states that neither the Resolution Applicant nor any other person acting jointly or in concert with the Resolution Applicant, nor any connected person as provided under Section 29-A of the IBC, 2016. The accounts of the Resolution Applicant and any connected person, or an account of the Corporate Debtor under the management or control of such person, of whom, such person is a Promoter, is not classified as nonperforming asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulations Act, 1949 or guidelines of a Financial Sector Regulator issued under any other law for the time being in enforce and at least a period of one year or more has lapsed from the date of such classification till the date of commencement of Corporate Insolvency Resolution Process of the Corporate Debtor and the applicant have not failed to make the payment of all overdue amounts with interest therein and charges related to non-performing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the records, the value of the properties of the Corporate Debtor has to be valued to ₹ 490 Crores which is the actual value, but as per the Resolution Plan only ₹ 143 Crores are proposed to be infused, which is against the actual valuation as the COC is only interested in recovering their money by selling off the properties of the Corporate Debtor at throw away price. It is alleged that the Ex-management was not given any chance to participate in order to appraise about the actual valuation of the properties. It is further contended that there is no clarity about the financial resources, Bank Guarantee/performance security and Form 'H' is not in compliance with the amended Form 'H'. There are other objections which are to be dealt with while discussing the reply to the objections. It is further alleged that the Respondent No. 2 was not given notice about the first meeting of the COC, so Respondent No. 2 cannot comment on the same. Therefore, Respondent No. 2 has filed the above-mentioned applications. 3. In reply to the Objections the Applicant has submitted that the Respondent No. 2/Directors/ Promoters of the corporate Debtor were informed vide E-M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormance bank guarantee dated 13.06.2019 of ₹ 50 crores on 14.06.2019 with the Applicant. 6. The Applicant further submits that this Authority vide Order 26.08.2019 dismissed CA. 260 261 of 2019, finding no merit in the Applications and has discussed other relevant points at length. The Applicant/resolution professional has referred to the decision of the Supreme Court in the case of Swiss Ribbons Pvt Ltd Anr Vs. Union of India ors., [2019 SCC online SC 73] wherein the provisions of the Code is interpreted as follow: - It can thus be seen that the primary focus of the legislation is to ensure revival and continuation of the corporate Debtor by protecting the corporate death by liquidation. The code is thus a beneficial legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors. The interests of the Corporate Debtor have, therefore been bifurcated and separated from that of its promoters/ those who are in management. Thus, the resolution process is not adversarial to the Corporate Debtor but in fact protective of its interests . 7. The Applicant/resolution professional has further referred to the ruling o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Respondent No.2 raised the objection that the value of the assets of the CD is more and the resolution plan offers less, which is against the concept of maximising the value of the assets of the CD. In this connection a reference can be made to the observation of the Hon'ble Supreme Court made in the matter of Maharashtra Seamless Limited vs. Padmanabhan Venkatesh Ors [Civil Appeal No.4242 of 2019]. In this case the Apex Court, vide its order dated 22.01.2020 has observed that there is no provision in the Code or regulations under which the bid of any resolution applicant has to match liquidation value arrived at in the manner provided in Regulation 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, and the intent of conducting valuation is only to assist the COC in decision- making. It may seem that release of assets at a value below its liquidation value is inequitable, however, the Court ought to rely on the commercial wisdom of the creditors rather than evaluating the resolution plan on the basis of quantum proposed to be paid. It is further observed that the Code has been formulated for maximisat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slnd bank dated 14.01.2020, and 07.07.2020 are placed on record. Further, it is noted that the amended Form-H, provides that the Resolution Plan complied with the provisions of the IBC and the regulations, 2016 and does not contravene any of the provisions of law for the time being in force. It also indicates that the Fair Value is ₹ 157.12 Crore, the Liquidation Value as ₹ 125.92 Crore. 12. Having demonstrated as above, the Applicant/resolution professional submits that the Objections raised by the Respondent No. 2 are misconceived on the ground that the provisions investing jurisdiction and authority in the Adjudicating Authority do not provide for security of the commercial decision made by the committee of Creditors, but to examine as to whether the resolution plan is in compliance with the provisions of Section 30(2) of IBC,2016 and the regulations made thereunder. 13. The submissions made by the applicant/resolution professional are supported with the documentary evidence. The reply of the applicant/resolution professional to the objection of Respondent No. 2 plausible. Therefore, in view of the reply and the observations made by the Hon'ble Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 th Meeting of the COC convened on 28.03.2019 the members of the COC unanimously approved the appointment of M/S. Bagchi Gupta, Chartered Accountants as consultants for carrying out the due diligence required under Section 29A of the Code for the two Resolution Plans received from two prospective Resolution Applicants viz, (1) M/S. NCJ Infrastructure Private Limited and (2) Krishna Constructions. In the 1 1 th meeting of the COC held on 05.04.2019 the members approved and allowed the Applicant to get the repairs of the air conditioning plant of the hotel and gen set installation at the hotel of the Corporate Debtor in order to keep them in the running condition. One of the prospective Resolution Applicants viz., Mr. Amit Goyal filed CA. No. 267 of 2019 before this Authority seeking inter-alia direction to the Applicant to accept and take on record the documents/information in furtherance of the EOI to ascertain the eligibility of the Applicant and to put the said resolution Plan before the COC for its due consideration which was disposed of vide Order 06.05.2019. 18. In the 14th Meeting of the COC held on the 02.05.2019 the revised Resolution Plan of NCJ Infrastructure priva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount due to Employees and Workmen is ₹ 21, 55,531/-. All the claims admitted by the Resolution professional shall be paid in full within 6 months from the Effective date and in no event the payments shall exceed the above said amount. d. The amount of ₹ 28, 75, 99,300/- which is due to other creditors whose claims were either not admitted or not submitted by the Creditors are classified as Other Creditors. Resolutions proposal: a. The Claims of the Financial Creditors amounts to ₹ 92,76,53,201 after adjustments as mentioned in the Resolution Plan. Amounts shall be repaid as and when the bank guarantees are invoked by the relevant party/authorities and amount is released by SBI and OBC. No equity shares shall be allotted to the Financial Creditors towards the outstanding dues. All the outstanding dues (other than Bank guarantee amount which would be dealt according to the clause in the Resolution Plan) shall be repaid on the closing Date. The Claims related to financial Debt submitted post 12 th March, 2019 and admitted prior to post closing date shall be distributed on pro rata basis to the Financial Creditors. b. The claims of the Operational Cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the board of director of the Company shall be reconstituted by the Resolution Applicant in accordance with Applicable Laws. b. The Resolution Applicant shall hold 100% of the equity share capital of the company. c. The existing equity shareholders of the Company shall not have any right in relation to the shares held by them in the company during implementation of the Resolution Plan. d. As per the Addendum to the Resolution Plan dated 29.05.2019 the Monitoring Committee will consist of the nominees of the Committee of Creditors, a nominee of Resolution Applicant and the Resolution Professional, who shall jointly supervise the implementation of the Resolution Plan. 22. It is specifically noted that the Resolution Applicant will infuse capital of ₹ 1, 00, 00,000/- in the Company by way of equity/equity linked instruments. Further depending on the requirements of the Company, the Resolution Applicant proposes to infuse the additional funds up to ₹ 9,00,00,000/by way of equity/ equity linked instruments or loan which will be utilised for day to day operations of the company and to meet the capex requirements to revive the operations of the company as and whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/-, then shall be payable in priority to the repayment of other debts of the Corporate Debtor as under: CRP cost up to ₹ 25,00,000 within 30 days of effective date in accordance with priority schedule provided in code. Balance CIRP costs within 180 days of effective date in accordance with priority schedule provided in the code. ii. In the event the actual CIRP cost is lesser than ₹ 4,50,00,000/- then it shall be payable in priority to the payment of other debts of the Corporate Debtor, in accordance with the Schedule given in the Resolution Plan and the excess CIRP cost shall be adjusted against the financial Creditors in accordance with the Schedule given in Resolution Plan. The Resolution Plan also deals with the interest of all the stakeholders. Section 30(2)(b) of the I B Code, 2016 And Regulation 38(1) of IBBI (Insolvency Process for Corporate persons) Regulations, 2016 The Resolution Plan provides for the payment of 100% the admitted claims of the Operational Creditor including those of the Employee and Workmen. Yes, the priority has been given. Section 30(2)(c) and Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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