TMI Blog2021 (11) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... chand Jain the Applicant, Resolution Professional of Globecon Commercial Services Private Limited, the Corporate Debtor by submitting a resolution plan under section 30(6), 31 and 60 (5) of the Insolvency and Bankruptcy Code, 2016 (Code) read with Rule 11 of the National Company Law Tribunal which was duly approved by the requisite majority of the Committee of Creditors (CoC) seeking approval of this Adjudicating Authority under section 31 of the I B Code. 2. The Applicant submits that the Hangji Global Limited, Operational Creditor initiated the Corporate Insolvency Resolution process (CIRP) against Globecon Commercial Services Private Limited under Section 9 of the Code and was admitted vide an order dated 25.01.2021 and the Applicant herein was appointed as the Interim Resolution professional (IRP) of the Corporate Debtor. 3. The Applicant submits that Public Announcement dated 29.01.2021 in Form A was published on the website of the IBBI and in Free Press Journal (Mumbai Edition English Language) and Nav Shakti (Mumbai Edition Marathi Language) newspapers on 29.01.2021. 4. The first meeting of the Committee of Creditors (CoC) was held on 23rd February, 2021 wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s/ Individuals/Consortium of Investors whether incorporated in India or outside India and Minimum assets under management ( AUM ) of ₹ 1 Crore or Committed Funds available for deployment/investment of at least ₹ 50 Lakhs in the immediately preceding completed Financial year for Financial Institutions/PE Funds/ Asset Reconstruction Companies/ Non-Banking Finance Companies/ Other Financial Investors including Consortium of Investor. 7. That the Applicant published Form G- Invitation for Expression of Interest on 8th April 2021 in 2 newspapers namely Free Press Journal (English Daily) and Navshakti (Marathi Daily) of Mumbai Edition and also uploaded on the IBBI website, whereby the last date for receipt of expression of interest (hereinafter referred to as EOI ) was 23rd April 2021 and the last date for submission of the Resolution Plan was 7th June 2021. 8. In the 4th meeting of the CoC held on 29th April 2021 the Applicant apprised the CoC members regarding the dates of issuance of the Form G and about receiving two (2) EOI s from PRAs i.e M/s PP Metalix Limited and M/s Hangji Global Limited. The members were informed that the Resolution Professional had received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by both the valuers namely CA Fanendra Munot and Mr. Sagar Shah and the same shall be shared only with the Financial Creditor upon the receipt of the confidentiality undertaking. The Applicant also informed the members about receiving of the final Transaction Audit Report from the Transaction Auditors i.e. M/s. Goneka Mehta and Associates and the same also will be shared to the Financial Creditor for their consideration. 13. Further, the authorized representative of the Financial Creditor i.e. Unnao Trading Private Limited and the Sales Tax Department of Maharashtra, Operational Creditor (Statutory/Government Authority) stated that the amount offered by the Resolution Applicant in the proposed plan is very less and should be reconsidered, to which the Resolution Applicant stated that they intend to restructure the distribution under the proposed resolution plan wherein the amount proposed under the Resolution Plan will be first attributed towards payment of the CIRP cost and the balance amount will be distributed amongst the Creditors proportionately to the amount of claim admitted in the total debt of the Corporate Debtor. He further added that the only asset the Corporate Deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,17,38,350/- (Rupees One Crore Seventeen Lakhs Thirty-Eight Thousand Three Hundred Fifty Only) and that of the Liquidation Value of all the assets is ₹ 23,21,238/- (Rupees Twenty Lakhs Twenty-one Thousand Two Hundred Thirty -Eight Only). 15. The Applicant in the 7th meeting of the CoC held on 5th July 2021 apprised the members of the CoC that the Transaction Audit Report of the Corporate Debtor submitted by M/s Goenka Mehta and Associates on 17th June 2021 was shared with Financial Creditor of the Corporate Debtor. Further, it was observed by Transaction Auditor s that the company M/s Globecon Commercial Services Private Limited had not violated the provisions of Section 43, 45, 49, 50 and 66 of the IBC, 2016 and there were no such Preferential, Undervalued, Extortionate and Fraudulent Transactions done by the erstwhile management of the Corporate Debtor. 16. That the Applicant also apprised the members of the CoC that the Resolution Applicant submitted a final Revised Resolution Plan on 29th June 2021 after incorporating the final observations and suggestions by the RP and CoC members in the previous meetings of the CoC. Further, the Resolution Applicant suggested to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een paid in full) shall be distributed amongst the Financial Creditors, the Operational Creditors and the Government Creditors on prorate basis in the ratio of their claims verified and admitted by the Resolution Professional. The entitlement of the Unrelated Financial Creditors in the Resolution Amount (Upfront FC Consideration) shall be paid to the Unrelated Financial Creditors of the Corporate Debtor in full and final settlement of their claims. The said amount shall be paid within a period of 30 days from the Resolution Plan Approval Date. 3. Payment to the Related Financial Creditors The Resolution Applicant does not propose to make any payment to the Related Financial Creditors of the Corporate Debtor. 4. Deferred cash payment to the Financial Creditors The Resolution Plan does not provide for any deferred payment to the Financial Creditor. The entire payment to the Unrelated Financial Creditors shall be made upfront within a period of 30 days from the Resolution Plan Approval Date. 5. Upfront c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orata basis in the ratio of their claims verified and admitted by the Resolution Professional. 8. Existing Equity Shareholders On the Closing Date, the outstanding Equity Shares held by the Existing Equity Shareholders shall stand transferred to the Resolution Applicant for an aggregate consideration of INR 1. 9. Fresh Fund Infusion to meet the working capital and capital expenditure requirement Within 12 months from the Closing Date, the Resolution Applicant shall infuse an amount of INR 10,00,000 (over and above the Resolution Amount) to meet the working capital and/or capital expenditure requirement of the Corporate Debtor. 19. The Resolution Applicant proposes to infuse ₹ 10,00,000/- as working capital over and above the total cash consideration of ₹ 40 Lakhs within 12 months from the closing date of the Resolution Plan. 20. Further it is submitted that the infusion of funds by the Resolution Applicant shall be in following manner :- Days from the Effective Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the statutory liabilities); or (ii) the amount that would have been paid to such Operational Creditors if the Resolution Amount had been distributed in accordance with the order of priority in section 53(1) of the Code, whichever is higher. iv. It is submitted that in the event any claim is not submitted to the Resolution Professional or such claim pertains to prior period to the approval of the Resolution Plan, such Operational Creditors shall not be entitled to receive payment under Resolution Plan with respect to such claims. It is also hereby submitted that the Resolution Applicant does not propose to make any payment to any Operational Creditor who is a Related Party or an Affiliate of the Corporate Debtor or a part of the Group Company. c. Payment to Financial Creditors i. It is submitted that the Applicant has admitted a total claim of ₹ 1,04,72,063/- (Rupees One Crore Four Lakhs Seventy-Two Thousand Sixty-Three Only) towards the claim of Financial Creditors out of which ₹ 40,00,000/- (Rupees Forty Lakhs Only) is the admitted claim of Unrelated Financial Creditors of the Corporate Debtor. ii. The Financial Creditor are proposed to be paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment to the Workmen and/or Employees pursuant to this Resolution Plan shall be made before any amount are paid to the Unrelated Financial Creditors. e. Payment to Government Creditors (Statutory liabilities including outstanding Governmental Authority dues, taxes, etc.) i. It is submitted that the Applicant has admitted a total claim of ₹ 1,62,49,504/- (Rupees One Crore Sixty-two Lakhs Forty-Nine Thousand Five Hundred Four Only) towards the claim of statutory authorities. ii. It is submitted that subject to the terms set out in the Resolution Plan and after the CIRP Costs have been paid in full, the Resolution Amount shall be distributed amongst the Unrelated Financial Creditors, the Operational Creditors (other than the Government Creditors and Workmen Employees) and the Government Creditors on pro-rata basis in the ratio of their claims admitted by the Resolution Professional as on the Resolution Plan Approval Date. The entitlement of the Government Creditors in the Resolution Amount ( Government Creditors Dues ) shall be paid as full and final settlement of all claims of the Government Creditors against the Corporate Debtor till the Resolution Plan Approva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor which comes to ₹ 4,00,000/-. Further the Applicant has issued (LoI) dated 10.07.2021 to the Resolution Applicant, to which the Resolution Applicant issued an Unconditional Letter of Acceptance to the Applicant. However, the Resolution Applicant vide email dated 13.07.2021 apprised the Applicant that in the Resolution Plan they have proposed to adjust the PBG against the EMD of INR 10 Lakhs and the remaining balance amount to be adjusted as a part of Upfront Investment Amount. 23. The Applicant further submits that the Resolution Plan submitted is in compliance with Section 30 (2) of the Code and Regulation 38 (A) of the CIRP Regulations. The RP has provided a compliance certificate in FORM H as mandated under the Code for seeking approval of the Resolution Plan from this Hon ble Bench. OBSERVATIONS OF THE ADJUDICATING AUTHORITY 24. We have heard the Applicant and perused the Resolution Plan and related documents submitted along with Application. 25. It is seen that the Resolution Applicant will infuse required working capital in to the Corporate Debtor to set up a steel slag processing unit which will process the Steel Slag to extract Nickel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e law for the time being in force; c) Confirms to such other requirements as may be specified by the Board. 28. Section 30 (4) of the Code reads as follows: (4) The committee of creditors may approve a resolution plan by a vote of not less than sixty-six percent. of voting share of the financial creditors, after considering its feasibility and viability, the manner of distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-section (1) of section 53, including the priority and value of the security interest of a secured creditor and such other requirements as may be specified by the Board. 29. Section 30(6) of the Code enjoins the Resolution Professional to submit the Resolution Plan as approved by the CoC to the Adjudicating Authority. Section 31 of the Code deals with the approval of the Resolution Plan by the Authority, if it is satisfied that the Resolution Plan as approved by the CoC under section 30(4) meets the requirements provided under section 30(2) of the Code. Thus, it is the duty of the Adjudicating Authority to satisfy itself that the Resolution Plan as approved by the CoC meets the above requirem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution Plan as approved by 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 grounds on which the Adjudicating Authority can reject the Resolution Plan is in reference to matters specified in Section 30(2) when the Resolution Plan does not conform to the stated requirements. 37. In CoC of Essar Steel (Civil Appeal No. 8766-67 of 2019 decided on 15.11.2019) the Hon ble Apex Court clearly laid down that the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved. In para42 Hon ble Court observed as under: Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of section 30(2) of the Code, insofar as the Adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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