TMI Blog2020 (10) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... but the underlying object and principle thereof, in resolving a debt-ridden Corporate Debtor, cannot be lost sight of. The adherence to specific timeline for resolution is the essence, which in effect would bring about successful resolution of a beleaguered Company, like CPG or for that matter other entities in the IL FS conglomerate. The UoI represented by the Regional Director, MCA (WR), Mumbai has no objection to the divestment of IL FS shares in CPG, as the same has been done in accordance with the approved Resolution Framework. On hearing the counsel for the Applicant in CA No. 1011 of 2020 as well as the Regional Director and having perused the pleadings and the documents attached thereto, we are satisfied and of the considered view that the sale of stake of IL FS (59.18%) in CPG has been done within the Resolution Framework and the same needs to be approved and recorded. Application disposed off. - CA No. 4127 of 2019 & CA No. 1011 of 2020 in CP No. 3638/MB/2018 Company Application No. 4127 of 2019 - - - Dated:- 5-10-2020 - Hon ble Janab Mohammed Ajmal, Member Judicial And Hon ble V. Nallasenapathy, Member Technical For the Applicants : Amit Vyas, Rish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the process required to be followed was similar to that of Corporate Insolvency Resolution Process for the purpose of proper Resolution of IL FS and its group companies. The Hon ble Appellate Authority further observed that in such cases the Committee of Creditors (CoC) may be required to be constituted for determining the viability, feasibility and financial matrix of the plan or offer, if any, given by one or other party for acquisition of one or other group companies or its assets and in the absence of any other knowledgeable person such as the Resolution Professional , (if) such Committee of Creditors cannot be constituted, in the meantime the IL FS and its board may be allowed to proceed with the matter. 6. The Hon ble NCLAT by an order dated 04/02/2019 permitted the UoI and IL FS to engage Hon ble Justice Mr. D. K. Jain (Retd.) to supervise the operation of the Resolution Process. Basing on the recommendations of Hon ble Justice Jain, the resolution was then to be placed before the NCLT (this Tribunal) for approval. The approval by this Tribunal would formalize and finalize the resolution of the individual or collective group entities. By their order dated 12/03/202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IL FS stake in CPG, has filed petition in the Hon ble NCLT, questioning the decision of the Board in not entertaining their EoI Application on the ground that the same was submitted 11 days after the deadline for submission of EoI. It is also pointed out that the said petition is pending consideration, but no interim order has been passed by the Hon ble NCLT in the said petition. The effect of this litigation shall be considered by the Hon ble NCLT at the appropriate stage. 9. It is submitted by the Applicant that it has market goodwill and has been undertaking activities similar to that of CPG for over 14 years. It is best suited to acquire the equity shares in CPG. It would also provide strategic growth to the Company. Being a serious contender for the proposed acquisition of the CPG shares (IL FS shares in CPG), it could not have been ignored. The primary object of inviting EoI is to maximize the benefit that could accrue to CPG which in turn would benefit all the stakeholders. R2 R3 failed to consider these aspects and rejected its EoI on a technical ground without proper evaluation or substantial reason. They also failed to realize the spirit of Corporate Debt Reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice Jain, the successful bidder has also executed the Share Purchase Agreement (SPA) on 27/06/2020. The grounds and reasons stated by the Applicant in delay in submission of EoI are false and frivolous. 11. It is further pleaded that the Applicant s contention that the natural justice has not been adhered to would not apply in the case of the rejection of EoI. The Respondents were also not obliged to provide hearing or give other reasons for rejection of the EoI. Besides, the Hon ble NCLAT by their order dated 12/03/2020 had directed for completion of the Resolution Process within 90 days. The relief if granted will be highly prejudicial and would disrupt the whole process of Resolution of CPG which is at an advanced stage. It is accordingly submitted that the Application deserves to be rejected. 12. Meanwhile, the IL FS filed Company Application No. 1011 of 2020 inter alia seeking the sale of CPG share to the successful bidder and for the implementation of the SPA. It is contended that upon getting the letter dated 08/08/2019 from the initial bidder, the FTAs on 19/09/2019 issued terms of bid for acquiring CPG BPM Services Private Limited inter alia setting forth the follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 4,15,00,000/-. Since this amount was 27.50% higher than the initial bid, the initial bidder, under the Swiss Challenge Method, lost his right to match the bid (H1), submitted by Vision Plus Security Control Private Limited. 15. The Board had appointed Grant Thornton India LLP as the Claims Management Consultant to conduct the claims management exercise of the IL FS group. Financial Creditors of IL FS have been identified basing on the determination of the claims management consultant. These constituted the Committee of Creditors (CoC) of the Group. On 16/03/2020 the Financial Creditors (CoC) convened the meeting in terms of the Resolution Framework. The bid, in order to be accepted, was required to get the approval of the 2/3rd (i.e. 66%) of the voting share of the CoC members in its favour. The H1 bid was put to vote and the CoC approved it by a vote of 75.46% for the sale of 59.18% stake of IL FS in CPG. The Board constituted by the Tribunal approved the Resolution of the CoC and recommended that the bid be placed before the Hon ble Justice Jain (Retd.) for consideration and approval. The matter was placed before the Hon ble Justice Jain (Retd.) on 21/04/2020. Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluding any statutory or tax claims) upon completion of the conditions contemplated in terms of the Share Purchase Agreement dated June 27, 2020 and realization of the Purchase Consideration by the Applicant as contemplated under the Share Purchase Agreement dated June 27, 2020. B. Allow the Applicant, CPG BPM Services Private Limited and Vision Plus Security Control Private Limited to implement and give effect to the terms of the Share Purchase Agreement dated June 27, 2020; C. Direct that the: v. PG Amount of INR 50,00,000/- deposited by Vision Plus Security Control Private Limited be appropriated/realized by the Applicant as being towards part payment of the Consideration contemplated by the SPA; vi. balance consideration payable by Vision Plus Security Control Private Limited being the Purchase Consideration less PG Amount be paid into a designated escrow account to be intimated by the Applicant D. Direct that the Applicant be permitted to utilize an amount of INR 35,94,288/- plus applicable taxes from the PG Amount realized by the Applicant as per prayer (C) (i) above towards Resolution Process Costs that have accrued in connection with the resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeing that the Resolution Process goes through as fast as possible so that the another management can through its entrepreneurial skills resuscitate the Corporate Debtor to achieve its revival. It was indicated that the object of keeping a Company/ Corporate Debtor alive in the hands of another management through Corporate Insolvency Resolution Process (CIRP) is in the interest of all the stake holders. The Hon ble Court in Swiss Ribbons (supra) inter alia observed as follows with regard to objects of the Code. As is discernible, the Preamble gives an insight into what is sought to be achieved by the Code. The Code is first and foremost, a Code for reorganization and insolvency resolution of corporate debtors. Unless such reorganization is effected in a time-bound manner, the value of the assets of such persons will deplete. Therefore, maximization of value of the assets of such persons so that they are efficiently run as going concerns is another very important objective of the Code. This, in turn, will promote entrepreneurship as the persons in management of the corporate debtor are removed and replaced by entrepreneurs. When, therefore, a resolution plan takes off and the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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