TMI Blog2021 (8) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... egulations 37, 38, 38(1A) and 39(4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law - Application allowed. - IA(IBC)/21/KOB/2021 in TIBA/03/KOB/2019 - - - Dated:- 29-1-2021 - Hon ble Mr. Ashok Kumar Borah, Member (Judicial) For the Applicant / RP - Shri Vinod Padinhare Veettil Advocate ORDER 1. This is an Application filed under Section 30(6) and 31(1) of the Insolvency and Bankruptcy Code, 2016 (the Code) by the Resolution Professional seeking approval of the Resolution Plan submitted by the Resolution Applicant, M/s Kerala Industrial Infrastructure Development Corporation (KINFRA), a statutory authority of Government of Kerala. 2. The facts leading to the Application are as under. (a) Hindustan Newsprint Limited ( HNL ) is a wholly owned subsidiary of Hindustan Paper Corporation Limiled ( HPCL ), a Public Sector Undertaking governed by the Ministry of Heavy Industries and Public Enterprises, Department of Heavy Industries, Government of India. HNL, was established pursuant to an agreement between Government of Kerala and HPCL on 07.10.1974 for establishment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIRP of the Corporate Debtor. 3. As per the report of the RP, the total claims received and admitted by the RP are as follows: CREDITORS Amount claimed (Rs in lakhs) Amount admitted (Rs in lakhs) Financial Creditors 209,12.76 209,09.18 Operational Creditors 408,21.64 309,46.22 TOTAL AMOUNT 617,34.39 518,55.40 4. During the period of CIRP the RP made public announcement in Form G on 05.06.2020 inviting Expressions of Interest (EOI) from Prospective Resolution Applicants (PRAs). The last date of submission of the EOI was on 20.06.2020 and the submission of Resolution Plan was on 27.07.2020. The Applicant received EOIs from six PRAs. All the six PRAs qualified to submit the Resolution Plan and accordingly the RP published the final list of PRAs on 29.06.2020 under Regulation 36A(12) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Out of the six PRAs the Applicant received resolution plans from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us stood extended from 05.01.2021 to 19.02.2021. 8. The salient features of the Resolution Plan are as under: A. The Resolution Applicant, Kerala Industrial Infrastructure Development Ltd (KINFRA), a Statutory Body of Government of Kerala was set up by an Act of the State Legislature in February 1993, aiming at accelerating the industrial development of the State by providing infrastructure facilities to industries. Chief Secretary to Government of Kerala is the Chairman of KINFRA. As per the audited financial statements, KINFRA has a Capital Fund of ₹ 214.17 crores as on 31st March 2019. KINFRA s thrust has been to facilitate the development of industrial infrastructure in the State, and as such it has successfully completed more than two decades of excellence in this field. KINFRA has been focusing on industrial infrastructure development, specifically aimed at the economic development of the industrially backward regions of the State, by setting up industrial Parks/Townships/Zones etc., which provide all the facilities required for the entrepreneurs to start an industry. The Industrial Parks developed by KINFRA have facilities like developed land or built-up space, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... event the Closing Action Notice is not issued within 5 (five) Business Days as aforesaid, it shall be deemed to be issued provided each of the conditions precedent have been satisfied. The Closing Action Notice shall identify the Effective Date when the action pertaining to the implementation of the Resolution Plan shall take place. C. Going Concern: The Resolution Plan envisages the business plan to acquire the Corporate Debtor as a going concern entailing a proposed outlay of ₹ 14560.17 lakhs. In addition to the above, RA will invest additional funds of ₹ 12589.83 lakhs as and when necessary towards capital addition, repair and maintenance, working capital, etc for restarting the operations of the Corporate Debtor. For financial sustainability/viability and also keeping in view of the fact that the unit requires major revamping, the RA proposes that they shall be free to appoint of its own resources including manpower, labour, workforce and shall not be bound by any Government authority to appoint any of the exiting employee / workmen or follow requirement of employing from particular state or region. RA further stated that they will follow its own well-desi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lders and all liabilities of the Corporate Debtor towards all the stakeholders of the Corporate Debtor and the group stakeholder shall be extinguished and settled, on and with effect from the NCLT approval date. The Resolution Applicant submitted that this Resolution Plan does not violate any provisions of law for the time being in force. F. Financial Terms: The Resolution Plan proposes an upfront payment of INR 14560.17 lakhs to creditors (including CIRP costs), in the following manner: Creditor names Amount of claims Submitted Rs in lakhs Amount admitted as per Resolution Rs in lakhs Amount of Estimated Claim Rs in lakhs TOTAL AMOUNT PROPOSED TO PAY OFF Rs in lakhs Resolution Process Cost (A) - - 212.4 212.4 Financial creditors Central Bank of India 8,384.99 8,384.99 8,384.99 2,945.31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,524.40 Operational Creditors - Other Creditors 4,586.68 893.31 893.31 145.71 Operatioonal Creditors - Total (C) 40,821.91 30,756.13 30,756.13 7,097.67 Feel for Monitoring, Documentation and Fillng of Implementation (D) 20 20 TOTAL PROPOSED OUTLAY OF FUNDS (A) + (B) + (C) + (D) 14,560. l7 G. Overall payment under the Plan: Resolution Plan contemplates following payments for the insolvency resolution of the Corporate Debtor as a going concern: Sl. No. Type of Outstanding debt Amount to be adjusted during 1 st Funding within 30 days Amount to be adjusted during 2 nd funding within 45 days Total Amount proposed to be paid (Rs.in lakhs) 1 CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plan under the Code and CIRP Regulations: The Applicant has conducted a thorough compliance check of the Resolution Plan in terms of the Code as well as Regulations 38 and 39 of the Insolvency and Bankruptcy Board of India (Corporate Insolvency Resolution Process) Regulations, 2016 (the Regulations) and has submitted his Form H under Regulation 39 (4). It is stated that the Plan is in compliance with the provisions of the Code and the Regulations. It is further submitted that the Resolution Applicant is not ineligible under Section 29A of the Code. K. Performance Security: The Applicant submitted that in terms of the Request for Resolution Plan (RFRP), the RA has, on 08.01.2021, submitted a performance bank guarantee of INR 14.5 crores. 9. The Applicant submitted that the Resolution Plan meets the requirement of Section 30 (2) of the Code in the following manner: A. Plan provides for the priority payment of CIRP costs in full from the fund to be infused by the Resolution Applicant. B. To pay the Operational Creditors of the Corporate Debtor in the manner indicated supra. It is submitted that the average Liquidation Value of the Corporate Debtor is INR 16,270 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution Applicant who successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution Applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution Applicant does on a fresh slate, as has been pointed out by us hereinabove. 11. In view of the above ruling of the Hon ble Apex Court, the Resolution Applicant takes over the Corporate Debtor with all its assets and liabilities as specified in the Resolution Plan subject to the orders passed herein. As already indicated the Resolution Plan has been approved by the CoC in its meeting held on 24.12.2020 with 92.72% voting right. 12. In A. Sashidhar v. Indian Overseas Bank Others: 2019 SCC Online SC 257 (- (2019) 12 SCC 150) the Hon ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 is due, guarantors and other stakeholders involved in the Resolution Plan. ii. The approval of the Resolution Plan shall not be construed as waiver of any statutory obligations of the Corporate Debtor and shall be dealt by the appropriate Authorities in accordance with law. Any waiver sought in the Resolution Plan, shall be subject to approval by the Authorities concerned. iii. The Memorandum of Association (MoA) and Articles of Association (AoA) shall accordingly be amended and filed with the Registrar of Companies (RoC), concerned for information and record. The Resolution Applicant, for effective implementation of the Plan, shall obtain all necessary approvals, under any law for the time being in force, within such period as may be prescribed. iv. Henceforth, no creditors of the erstwhile Corporate Debtor can claim anything other than the liabilities referred under para 8(F) above. v. The moratorium declared under Section 14 of the Code shall cease to have effect from this date. vi. This B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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