TMI Blog2020 (10) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... Creditors (including Workmen Employee and Statutory Dues) at Zero. Therefore, the amount to be distributed between operational creditors in the event of liquidation, if distributed in order of priority in Section 53(1) of the Code would be NIL. Further, there are no dissenting financial creditors as the resolution plan has been approved by 100% voting share of the Financial Creditors. Also it is stated in para 5.5 (ii) of the plan that Dissenting Financial Creditors shall be paid in accordance with Section 30(2) of the IBC provided that such payment shall not be made in priority to Financial Creditors who vote in favour of the plan. Hence, Section 30(2)(b) of the Act stands complied with. Requirements of Regulation 39(4) of the Regulations - HELD THAT:- It is observed that in the 10th meeting of CoC held on 04.11.2019, approval was given for obtaining 50% of the performance security in the form of Demand Draft and remaining 50% in the form of Bank Guarantee from the resolution applicant. It is submitted that as per the requirement of performance security, the Performance Guarantee has been provided in the way of Bank Draft for ₹ 11,50,00,000/- and remaining in the form o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the CoC as per the provisions of Section 21 of the Code. 4. It is submitted that the applicant as IRP also appointed two registered valuers to determine the fair value and liquidation value of the corporate debtor in accordance with Regulation 35 of the Regulations and the fair value and liquidation value as assessed on the basis of these two reports as per unamended Regulation 35 comes to ₹ 153.58 crores and ₹ 122.87 crores respectively. 5. It is stated that in the first meeting of the CoC held on 13.03.2019, the CoC resolved to continue with the IRP and appointed him as RP and in the second meeting of CoC held on 19.04.2019, the eligibility criteria for prospective Resolution Applicants was approved. The RP made a public announcement for invitation of resolution plan/expression of interest (EOI) in Form G as prescribed in Regulation 36 (A) of the Regulations by publishing the Form G in Financial Express, Delhi/NCR/Chandigarh Region and Jansatta Delhi/NCR Sonipat Edition on 22.04.2019. The last date for submission of EOI is 17.05.2019. 6. The RP apprised the CoC that EOI was received from 12 prospective resolution applicants and the eligibility criteria wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for submission of resolution plan was on 09.10.2019 which was further extended to 19.10.2019. 11. The RP apprised the members of the CoC that the resolution plan in sealed envelope alongwith EMD was received from three prospective resolution applicants out of which two were previous applicants namely Haldiram Snacks Private Limited (HSPL), Cygnet Projects Private Limited (CPPL) and the third applicant is Aarone Developers Private Limited (ADPL). It is submitted that the resolution plan was opened and presented to the CoC members in the 9th meeting of the CoC on 31.10.2019. The prospective resolution applicants requested additional time to submit the revised resolution plan along with the revised bid amount. 12. In the 10th meeting of the CoC members on 04.11.2019, the resolution applicants submitted their revised resolution plan and the RP apprised the CoC that the plan submitted by ADPL and the revised plan of HSPL are above the liquidation value. The members by exercising their commercial wisdom approved the revised resolution plan submitted by Haldiram Snacks Private Limited by 100% voting share in favour of it. It is also stated that the CoC decided the terms and conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed above, the IRP constituted the CoC as per the provisions of Section 21 of the Code. The details of the financial creditors, the distribution of voting share among them and the position of voting for the resolution plan is as under (para no.4 of Form H - Annexure A-1, Diary No.7149 dated 16.12.2019) Sl. No. Name of Creditor Voting Share (%) Voting for Resolution Plan (Voted for / Dissented / Abstained) 1 Alchemist Asset Reconstruction Company Limited (AARCL) 10.93 Voted For Resolution Plan 2 Cygnet Projects Private Limited 89.00 Voted For Resolution Plan 3 JFC Finance Limited 0.07 Voted For Resolution Plan 19. The details of stakeholders under the resolution plan given in para 7 of Form H (Annexure A-3, Diary No.7149 dated 16.12.2019) is as follows:- (Amount in Rs. lakh) Sl. No. Category of Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per Financial Statements submitted YES Section 29A Whether the Resolution Applicant is eligible to submit resolution plan as per final list of Resolution Professional or Order, if any, of the Adjudicating Authority? As per Final List of PRA dated 14.09.2019 YES Section 30(1) Whether the Resolution Applicant has submitted an affidavit stating that it is eligible? YES YES Section 30(2) Whether the Resolution Plan: (a) provides for the payment of insolvency resolution process costs? (b) provides for the payment of the debts of operational creditors? (c) provides for the management of the affairs of the Corporate debtor? (d) provides for the implementation and supervision of the resolution plan? (e) contravenes any of the provisions of the law for the time being in force? Para 5.2.3 of the Plan provides for payment of CIRP cost. As per Para 5.7 of the Plan, it has been proposed to settle the 100% of the admitted OC at zero. Para 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with Section 30(2) of IBC. YES There is no dissenting Financial Creditor in the matter. Regulation 38(1A) Whether the resolution plan includes a statement as to how it has dealt with the interests of all stakeholders? Para 8 of the Plan includes a statement as to how it has dealt with interest of all stakeholder. YES Regulation 38(2) Whether the Resolution Plan provides: (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? (c) adequate means for supervising its implementation? Para 5.11 gives the timeline for implementation of the Resolution Plan. Para 6 of the Plan gives the detail of Management of the CD after approval of the Plan. Para 7 of the Plan states the manner of implementation and supervision of the plan. YES 38(3) Whether the resolution plan demonstrates that - (a) it addresses the cause of default? (b) it is feasible and viable? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause shall also apply to the corporate insolvency resolution process of a corporate debtor- - (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan;] 22. It is observed that the total admitted claim due to Operational Creditors (including workmen) is ₹ 3.53 crores but as the liquidation value i.e. ₹ 122.87 crores, is not sufficient to cover the dues of Financial Creditors, therefore, nothing is paid to be operational Creditors. Since, the Liquidation Value for the Operational Creditors is Zero, the resolution plan proposes to settle the 100% of the admitted Operational Creditors (including Workmen Employee and Statutory Dues) at Zero. Therefore, the amount to be distributed between operational creditors in the event of liquidation, if distributed in order of priority in Section 53(1) of the Code would be NIL. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the operational creditors in the event of a liquidation of the corporate debtor under section 53; (c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan; (d) the implementation and supervision of the resolution plan; (e) does not contravene any of the provisions of the law for the time being in force; (f) confirms to such other requirements as may be specified by the Board. 27. The compliance of Section 30(2) of the Code is given in para No.9 of Form H (supra). The same is being further examined as under: - Section 30(2)(a): The resolution plan provides for the payment of ₹ 10,00,000/- as CIRP cost in priority to any other creditors of the corporate debtor within ninety (90) days from the approval of the Resolution Plan by the Adjudicating Authority. It is also stated that any payment above the CIRP costs of ₹ 10 lacs will be deducted from the payment made to the Financial Creditors. Copy of letter by the HSPL is attached as Annexure A-1 (Diary No.7149 dated 16.12.2019). Section 30(2)(b): It is stated in Form H that the average liquidation value of the corporate debtor is ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital Expenditure and Working Capital. Also, it is also stated that in addition to a sum of ₹ 115.00 crore, the Financial Creditors will also be paid from the refund (to the tune of 9.2 crores), if (any) received arising from the pending Writ Petition No. 11052/2009 before Delhi High Court and there is no obligation on the part of the RA to pay any amount to the Financial Creditors in case no such refund is received by the CD. The above has been stated by the RP and COC by way of separate affidavits filed vide Diary No. 519 and 512 both dated 20.01.2020 respectively. 29. We have discussed above that the requirements under Section 31(1) of the Code are satisfied in the present case. In para No.4 of Form H (supra) the RP has certified that the resolution plan complies with all the provisions of the Code and Regulations and does not contravene any of the provisions of the law for the time being in force. The RP has also certified that the resolution applicant Haldiram Snacks Private Limited has submitted affidavit pursuant to Section 30(1) of the Code confirming its eligibility under Section 29A of the Code to submit the resolution plan and the contents of the said affidavit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business decisions of the financial creditors are not open to any judicial review by the adjudicating authority or the appellate authority. 33. We may add that in the case of Maharashtra Seamless Limited vs. Padmanabhan Venkatesh Ors. in Civil Appeal Nos. 4242 of 2019 it has been held in para 26 thereof that No provision in the Code or Regulations has been brought to our notice under which the bid of any Resolution Applicant has to match liquidation value arrived at in the manner provided in Clause 35 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016.... 34. In view of the above discussion, the decision taken by the financial creditors falls within the ambit of its commercial and banking wisdom and is therefore, not being interfered with. 35. We shall now discuss the requirements of Regulation 39(4) of the Regulations. It is observed that in the 10th meeting of CoC held on 04.11.2019, approval was given for obtaining 50% of the performance security in the form of Demand Draft and remaining 50% in the form of Bank Guarantee from the resolution applicant. It is submitted that as per the requirement of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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