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TMI Blog2021 (9) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... re as under : (a) The corporate insolvency resolution process (CIRP) of the corporate debtor was initiated by this Bench by order dated September 29, 2017 (admission order) and Mrs. Charu Desai was appointed as interim resolution professional (IRP), who was subsequently confirmed as the resolution professional (RP). (b) On November 30, 2018 in M. A. No. 692 of 2018, this Tribunal approved the resolution plan submitted by Formation Textiles LLC (FTL). FTL took over the management/control of the affairs of the corporate debtor on January 31, 2019. However, after taking over the management/ control of the corporate debtor, FTL did not implement the resolution plan as per its terms. FTL after taking over the corporate debtor (Mandhana Industries Ltd.) changed its name. The corporate debtor since August 20, 2019 accordingly is known as "GB Global Ltd". This Tribunal by order dated December 5, 2019 as an interim measure, directed restoration of CIRP and directed FTL to hand over the possession of the corporate debtor to the CoC and the erstwhile RP. Accordingly, in the meeting of the CoC held on January 8, 2020 FTL handed over the possession of the corporate debtor to the CoC, who in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n INR crores) Particulars Kakode and Associates Garg and Associates Average value Liquidation value 179.77 190.88 184.92 Fair value 394.48 364.82 379.65 (g) By September 10, 2020 the resolution plan was received from one PRA, viz., DLH. In the 33rd meeting of the CoC, held on September 11, 2020 the representatives of DLH were invited to present the resolution plan before the CoC. After the presentation, it was decided that the RP along with her advisors would review the resolution plan to check its compliance with the Code and request for resolution plan (RFRP) document, and formally table a Code-compliant plan before the CoC. Thereafter, various rounds of negotiations were held with the resolution applicant and the resolution plan was revised from time to time to address the comments and concerns of the RP and CoC members. (h) In the 37th meeting of the CoC, held on November 10, 2020 the revised resolution plan submitted by DLH was placed for consideration. The CoC members discussed and considered the resolution plan as per the evaluation matrix, the feasibility and viability of the resolution plan and the report on compliance checks under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The RA has completed more than 60 projects across Mumbai and multiple projects are ongoing. (ii) The RA with a net worth of Rs. 130.07 crores as on March 31, 2020 is managed by Mr. Vijay Thakkar who is the major shareholder with 97.7 per cent. shareholding. The balance shareholding remains with his friends and family members. (B) Term of resolution plan : The term of the resolution plan shall commence on the plan approval date and shall continue until the discharge date, i. e., 12 months from Infusion date. (C) Capital reduction and equity infusion : The plan provides for reduction of existing equity share capital and issue of new shares to the resolution applicant. Thereupon the RA will hold 99.94 per cent. of share capital of the company. The RA shall infuse Rs. 50 crores as share application money into the corporate debtor by utilizing certain fixed deposits available with the RA which were utilized for pro viding the PBG as required under the RFRP. Simultaneously and immediately on the infusion date, the original PBG shall be returned to the RA as per procedure detailed in the plan. (D) Summary of financial proposal : (i) The total financial outlay proposed as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors Dissenting 389.63 72.41 19 Assenting 774.14 78.59 10 Unsecured financial creditors Dissenting NA NA 0 Assenting 17.17 - 0 Total 1180.95 151.00 13 (E) Source of funds : The SRA proposes to make payments to the creditors of the corporate debtor by infusing funds into the corporate debtor as follow : (a) Upfront equity infusion-Rs. 50 crores through share application money. (b) Upfront unsecured loan-Rs. 5 crores. (c) Sale of assets (of the corporate debtor described in clause 5.3(c) of the resolution plan)-SRA assumes Rs. 20 crores will be received within year-1. However, no value can be given as of now as the value will depend on the sale consideration to be received. For the balance amount out of the total pay-out to the creditors, SRA will infuse sufficient amount as unsecured loans (clause 5.3(d) of the resolution plan). Such unsecured loans will be interest free till the time financial creditors are repaid and stand subordinated to the loans of the financial creditors. (F) Management of the corporate debtor : As stated in clause 6.2 of the resolution plan, with effect from the plan appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate debtor, keeping in view the objectives of the Code (regulation 38(1A)) as per clause 4.5. (d) Declaration by the resolution applicant that neither the resolution applicant nor any of its related party has either failed or contributed to the failure of the implementation of any other approved resolution plan (regulation 38(1B)) as per clause 2.9(iii). (e) Provides for term and implementation schedule, management and control of the corporate debtor and adequate means for supervising its implementation (regulation 38(2)) as per clauses 8.1, 5.1(vii), 6.1, 6.2 and 6.3. (f) Demonstrates that it has addressed the cause of default, feasibility and viability, provisions for effective implementation, provisions for approvals required and the time-lines for the same, capability to implement the resolution plan (regulation 38(3)) as per clauses 3.2, 7, 5, 9.9 and 2. (H) Reliefs and concessions : The SRA has sought for general reliefs, concessions and dispensations at clause 10 of the resolution plan. (I) Status of the operational creditors during the period in which the corporate debtor was under the control of the former SRA (FTL) : It is submitted that the former SRA has c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired by the CoC (as assisted by the resolution professional) and/or if the CoC as a body does not subsist, by the financial creditors having more than 51 per cent. voting share in the CoC. The CoC in its commercial wisdom has permitted the SRA to take back the PBG immediately on the approval of the resolution plan by this Authority so that the fixed deposits on the security of which PBG was issued can be utilized for infusion. We do not want to interfere with such decision of the CoC, even if this is a diversion from the requirements of the RFRP. (K) Utilization of fixed deposits of former SRA (FTL) lying with the corporate debtor : As a part of the resolution plan, it has been submitted that the former SRA has infused Rs. 42.99 crores into the corporate debtor which is reflected in the current liability and the amount is kept as a fixed deposit with Bank of Baroda, the lead bank. This amount was infused as share application money. But the shares were not issued. It is stated by the new SRA that such amount infused by the former SRA is not an asset over which it or the corporate debtor would have any interest and the treatment of this amount shall be at the instructions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akes over the corporate debtor with all its assets and liabilities as specified in the resolution plan subject to orders passed herein. As already indicated the resolution plan has been approved by the CoC with 67.01 per cent. votes in its meeting held on December 31, 2020. 6. In K. Sashidhar v. Indian Overseas Bank [2019] 213 Comp Cas 356 (SC) ; [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 the resolution professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the resolution plan as approved by the CoC meets the requirements specified in section 30(2). The hon'ble Court observed that the role of the NCLT is "no more and no less". The hon'ble Court further held that the discretion of the Adjudicating Authority is circumscribed by section 31 and is limited to scrutiny of the resolution plan "as approved" by the requisite percent of voting share of financial creditors. Even in that enquiry, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to be considered by them favourably, subject to relevant Laws and Rules, so that the implementation of plan becomes smooth. (iii) With regard to the reliefs and concessions sought by the resolution applicant in respect of the corporate debtor, the Monitoring Committee or the new management, as the case maybe may approach the respective authorities and departments for such reliefs. The authorities concerned may favourably consider such applications as deemed proper under law, keeping in view the object of resolution of the corporate debtor as envisaged in the Code and various pronouncements of the hon'ble apex court. (iv) The memorandum of association and articles of association shall accordingly be amended and filed with the Registrar of Companies, 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. (v) Henceforth, no erstwhile creditors of the corporate debtor can claim anything other than the liabilities taken over by the resolution applicant. (vi) The moratorium under section 14 of the Cod ..... X X X X Extracts X X X X X X X X Extracts X X X X
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