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TMI Blog2020 (10) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Insolvency Resolution Process (CIRP) in the case of M/s. Haryana Steel & Alloys Limited (hereinafter referred to as Corporate Debtor) and the same was admitted vide order dated 13.02.2019 and the CIRP of the corporate debtor was initiated. It is submitted that the applicant was appointed as Interim Resolution Professional (IRP) vide order dated 13.02.2019 and within three days of the appointment order, the IRP issued a public announcement as per Regulation 6 of the Regulations read with Section 15 of the Code in Form A in two newspapers i.e. Amar Ujala (Hindi) covering Murthal/Sonipat dated 16.02.2019 and in Financial Express (English), New Delhi & NCR on 16.02.2019 thereby inviting claims from the creditors of the corporate debtor as envisaged in the Code. 3. It is submitted that in pursuance of the public announcement, total 3 claims were received from the financial creditors which were verified and after collation, the IRP constituted 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 Regulatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur resolution applicants, only 2 resolution applicants namely Haldiram Snacks Private Limited (HSPL) and Cygnet Projects Private Limited (CPPL) had submitted their Earnest Money. As the number of resolution plans received from the prospective resolution applicants were below the expectation of CoC and in order to maximize the value of the Corporate Debtor, the members of the CoC unanimously decided to publish fresh EOI in Form G to invite more prospective resolution applicants to submit their plans and a fresh Form G dated 14.08.2019 was again published on 15.08.2019 (Annexure A-16). The last date for submission of the EOI was fixed at 30.08.2019. 10. It is submitted that in the 8th meeting of CoC held on 07.10.2019, the RP apprised the members that the final list consisting 8 prospective resolution applicants was published on 14.09.2019 and the IM, Evaluation Matrix and RFRP were issued on 09.09.2019. The last date 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 tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Code and the Regulations were complied with and that the approval of the resolution plan was made by 100% voting share of the financial creditors in the meeting of the CoC held on 04.11.2019 and therefore, the resolution plan submitted by M/s. Haldiram Snacks Private Limited may be approved. 16. We have carefully considered the submissions of the learned counsel for the RP and the learned Counsel for the resolution applicant and have also perused the record. 17. The corporate debtor was incorporated on 10.12.1969 and as discussed above, the CIRP proceedings were initiated by order delivered on 13.02.2019. The present application is filed for approval of the resolution plan submitted by M/s.Haldiram Snacks Private Limited. The approval has been sought under the provisions of Section 31(1) of the Code. 18. We may first of all state that after receipt, verification and collation of claims as discussed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 plan. Para 11.1(g) of the Plan states that it is not in contravention of the provisions of the Applicable law. YES Section 30(4) Whether the Resolution Plan (a) is feasible and viable, according to the CoC? (b) has been approved by the CoC with 66% voting share? a) The COC has approved the Resolution Plan after considering the feasibility and viability in terms of manner of distribution proposed in accordance wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes 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? Para 4.4, clause a) addressed the cause of default. Para 4.4, clause b) provides the proposed action for making it YES (c) it has provisions for its effective implementation? (d) it has provisions for approvals required and the timeline for the same? (e) the resolution applicant has the capability to implement the resolution plan? feasible and viable. Para 7 of the Plan states the manner of implementation and supervision of the plan. Para 5.12 specifies the various grants, exemptions and permissions required. Para 4.4 (b) of the Plan states that the Resolution Applicant has the capability to implement the Resolution Plan. 39(2) (b) Whether the RP has filed applications in respect of transactions observed, found or determined by him? Based on Transaction Audit Report obtained by the Resolution professional, no such transaction was determined by the RP. No 21. Section 30(2)(b) as substituted by Act No. 26 of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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. 23. The approval of the resolution plan has been sought under Section 31(1) of the Code, reading as follows: - If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. Provided that the Adjudicating Authority shall, before passing an order for approval of resolution plan under this sub-section, satisfy that the resolution plan has provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further stated that since the liquidation value of the corporate debtor is not sufficient to pay the outstanding debts of secured financial creditors in full, therefore the liquidation value payable to the operational creditors including Workmen & Employee and statutory dues is Nil. It is also stated that the claims by Government are nil. Section 30(2)(c) & (d): The resolution plan provides complete plan for management of the affairs of the corporate debtor (page 47-49 of the application). As per para 6 of the resolution plan (pg. 47) and upon the NCLT Approval Date, the corporate debtor will be managed by the Monitoring Agency and Turnaround Experts in which the Resolution Professional will be the Monitoring Professional till the payments as per the plan are made. It is stated in the resolution plan that the board of directors of the corporate debtor will be reconstituted and key managerial personnel will be appointed. The possible list of Board of Directors of the Resolution Applicant consists of Mr. Manohar Lal Agarwal, CMD, Mr. Ashok Tyagi, Executive President and Mr. Pankaj Agarwal, Managing Director of HSPL. It is also stated in para 7.2 of the plan that the Resolution Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solution plan has been approved by the CoC with 100% voting share in accordance with the provisions of the Code and CIRP Regulations made thereunder and after considering the feasibility and viability and other requirements specified by the CIRP Regulations. 30. The RP has also filed affidavit vide Diary No.519 dated 20.01.2020 that Clause 5.2 of the resolution plan submitted by HSPL provided for infusion of Rs. 115.10 crore towards full and final settlement of the claim of the financial creditor and the CIRP cost and that it was completely within the knowledge of the CoC as well as the Resolution Professional that this amount was below the average liquidation value of the assets of the corporate debtor i.e. Rs. 122.87 crore. It has been submitted that the CoC while exercising the commercial wisdom and in the interest of the corporate debtor, consciously resolved to approve the resolution plan of HSPL with 100% voting share. 31. The CoC has also filed affidavit vide Diary No.512 dated 20.01.2020 submitting that it was within the knowledge of the members of the CoC that the amount proposed to be infused by the resolution applicant in the corporate debtor was below the average liqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the way of Bank Draft for Rs. 11,50,00,000/- and remaining in the form of unconditional Bank Guarantee for Rs. 11,50,00,000 both favouring the Financial Creditor. A copy of Demand Draft and Unconditional Bank Guarantee is annexed as Annexure A-3 (Colly).It is thereby submitted that the requirements of performance security under Regulation 39(4) of the Regulations read with 36B(4A) of the Regulations are complied with. 36. On the basis of discussion made above and in view of the provisions of Section 30(4) of the Code, we approve the resolution plan submitted by Haldiram Snacks Private Limited as approved by the CoC. The resolution so approved shall be binding on the corporate debtor and its employees, members, creditors [including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed,] guarantors and other stakeholders involved in the resolution plan. 37. Under the provisions of Section 31(3) of the Code, we also direct as under:- a) The moratorium order passed by the Adjudicating Authority under Section 14 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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