TMI Blog2020 (5) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... se financial constraints faced by State Governments - In view of the relaxation so granted by R.B.I as Developmental and stated above, the claim of Resolution Applicant in Regulatory Policies , respect of the concession /relaxation in the time line for payment to its Financial Creditors/Operational Creditors/Other stakeholders, if any, is genuine and bonafide, therefore, Resolution Applicant deserves relaxation/concession. Such relaxation in the time frame or timeline for payments is/are not going to change the nature and character of the Plan, moreover such concession/modification is approved by UCO Bank having 83.31% stake, while SBI is having 16.69% stake, but UCO Bank has approved the relaxation, so sought for by the resolution applicant in timeline for the payment. However, SBI though approved its first tranche of payment but have reservation in 2nd tranche of payment. It is needless to mention herein that, the very object of the IBC is, Resolution is the rule and Liquidation is an exception , liquidation brings the life of a Corporate to an end. It destroys organizational capital and renders resources idle till reallocation to alternate uses. Further, it is inequitable a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting to ₹ 2,64,03,04,295.53 but had admitted the claims for an amount of ₹ 1,41,76,23,683.06 only, which said list of the claimants/creditors are annexed along with the application as Annexure 2.3. As on 12-02-2020 the member of the COC are UCO Bank as well as SBI, the detail of the Financial Creditor and their voting share is given here under : Sr. No Financial Creditors Votingshares 1 UCO Bank , Zonal office Ashram Road , Ahmedabad-380009 83.31 % 2 SBI Stressed Asset Management branch, Ashram Road, Ahmedabad 16.69% 2.4. It is further stated that the first meeting of the Committee of Creditors was held on 24.05.2019 and it was approved by the COC for appointment of Resolution Professional namely Mr. S.K. Agarwal in place of the IRP Mr. Parag Seth by 100% voting. Vide order dated 01.01.2020 the Hon'ble Adjudicating Authority appointed Shri S. K. Agarwal as RP for the Corporate Debtor. 2.5. The liquidation value of the Corporate Debtor is ₹ 93.79 Crores. The same has been stated und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether the resolution applicant meets the criteria approved by the COC having regard to the complexity and scale of operations of the business of the CD? Clause 3 Yes 2. 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? Yes Yes 3. Section 30(1) Whether the resolution applicant has submitted an affidavit stating that is eligible? Yes Yes 4. Section 30(2) Whether the Resolution Plan : a) Provides for the payment insolvency of resolution process costs? 4.3 Yes b) Provides for the payment to the operational creditors? 4.4 4.6 Yes c) Provides for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the Resolution Applicant has submitted the statement giving details of such non-implementation? i) Whether the Resolution Applicant or any of its related parties has failed to implement or contributed to the failure of implementation of any resolution plan approved under the Code. (ii) If so, whether the Resolution Applicant has submitted the statement giving details of such non- implementation? Undertaking received Yes 11. 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 implementation? 5 5 7 Yes Yes Yes 12. Regulation 38(3) Whether the resolution plan demonstrates that - (a) It addresses the cause of default? (b) It is feasible and viable? (c) It has provisions for its effective imple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor as set out in Para 4.2.3 of Plan; c) Provides for the management of the affairs of the Corporate debtor after approval of the resolution plan. as set out in Para 7; of the Plan d) Provides for the implementation and supervision of the resolution plan as set out in Para 7 of the Plan; e) Does not contravene any of the provisions of the law for the time being in force. It is clarified that, if any approval of shareholders is required under the Companies Act, 2013(18 of 2013) or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law; f) Confirms to such other requirements as may be specified by the Board. Regulation 38 of CIRP Regulations: (I) The amount payable under the resolution plan- a) to the operational creditors shall be paid in priority over the financial creditors as set out in Para 4.2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the charges, bank guarantees, all obligations, liabilities, claims or proceeding in relation to any corporate guarantees, indemnities and all other forms of credit support, whether or not invoked or being capable of being invoked provided by the Corporate Debtor prior to the closing date. It is to be mentioned that these are the issues which are required to be dealt with by the COC at the time of the approval of the plan. Since COC has already approved the Plan with all stipulation contained therein, it requires no further consideration/adjudication. 10. With regard to clause 11 page no 372(VoI-iii) of the Plan of court record heading Reliefs Sought', in this regard it directed that the Resolution Applicant have liberty to approach the relevant / Concerned /Appropriate Competent/Statutory Authority(s) or Local bodies as the case may be for any concession and relief, as sought for in clause 1 1, 11.1, (a) to (p) at page no 372 to 376 of the Plan. 11. It is needless to mention that approval of the Resolution Plan does not mean automatic waiver or abetment of legal proceedings, if any, which are pending by or against the Company/Corporate Debtor, as those are the subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laxation, in time limit for payment, if any, for the approval of COC, with a liberty to COC to file their terms, if any, on or before 14.05.2020. 16. Accordingly, the matter was taken up for hearing on 14.05.2020. on which date the Learned Lawyer of the COC namely Ms. Nitu Chaturvedi, fairly submitted that the UCO Bank approved the revised Plan in respect of time line for payment, without any condition and observation. On perusal of the record it is found that the UCO Bank has informed the Resolution Applicant vide its letter no ZOAHM/LAW/07/2020-21 dated 12.05.2020, the copy of the said letter is filed along with pursis of COC, which is a pan of record, duly signed by Zonal Head, forwarded to Resolution Professional. However, the other member of the COC i.e. SBI reiterated its stance which was communicated by SBI to Resolution Professional vide its e-mail dated 4.05.2020 (which is part of record), wherein, it is categorically stated as; Although their Resolution Applicant justification for seeking 180 days extension in part payment of the First Tranche amount were not so convincing, We were prepared to accept the same. However, the reasons furnished by them for seeking e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Note: The secured financial creditors shall continue to hold existing security on the assets of the Corporate Debtor till their claim is fully paid as provided in the resolution plan. Any cost overrun in CIRP cost shall be recovered from outlay provided for the Financial Creditors/Operational Creditors. The summary of the proposed changes in the terms of the payments: Original Schedule Revised Schedule Initial payment of ₹ 47.14Crores. Within 90 days from the approval date. Initial payment of ₹ 47.14Crores. Only ₹ 20 Crores rescheduled/extended by 180 days. Final payment of Within ₹ 47.86Crores within 410 days from the initial payment date. Final payment of ₹ 47.86 Crores Only ₹ 23.93 Crores Rescheduled by 365 days. 18. On perusal of the affidavit dated 29.04.2020, so filed by the Resolution Applicant, seeking modification/concession/relaxation in the time line for the payment to the Financial Creditors/OperationaI Creditors and/or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being provided specifically to enable borrowers to tide over COVID-19 disruptions, the same will not be treated as changes in terms and conditions of loan agreements due to financial difficulty of the borrowers and, consequently, will not result in asset classification downgrade. As earlier, the rescheduling of payments on account of the moratorium/deferment will not qualify as a default for the purposes of supervisory reporting and reporting to credit information companies (CICs) by the lending institutions. CICs shall ensure that the actions taken by lending institutions in pursuance of the announcements made today do not adversely impact the credit history of the borrowers. In respect of all accounts for which lending institutions decide to grant moratorium/deferment, and which were standard as on March 1, 2020, the 90-day NPA norm shall also exclude the extended moratorium/deferment period. Consequently, there would be an asset classification standstill for all such accounts during the 5 moratorium/deferment period from March 1, 2020 to August 31, 2020. Thereafter, the normal ageing norms shall apply. NBFCs, which are required to comply with Indian Accounting Standards (IndAS), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Financial Creditors. o Keeping in view such object behind the enactment of the Code, intention of the Legislature, that the priority is to be given to the Resolution than Liquidation in the larger interests of the public, workmen, stakeholders and the other employees of the corporate debtors in the interest of justice and in order to achieve the object of the Code and liquidation of a company can only be as a last resort, wherein, all efforts for brining Resolution Plan were failed or it cannot be found workable in the larger public interest. Hence, now the approval of Resolution Plan by this Adjudicating Authority is rule as per the Apex COM's decision in the matter of K. Sashidharan Vs. Indian Overseas Bank Ors as discussed above. 23. Under the facts and the circumstances as narrated and discussed in sequel herein above, the Resolution Plan with modified time frame in respect of mode of payment to Financial Creditors/Operational Creditors/ Other stake holders if any, or as the case may be is/are allowed and accordingly the modification/concession/relaxation, so sought for, by the Resolution Applicant is /are also part of the Resolution Plan dated 12.12.2020 an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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