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TMI Blog2021 (10) TMI 1329X X X X Extracts X X X X X X X X Extracts X X X X ..... f India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations") for approval of the Resolution Plan in respect of Dimension Steel & Alloys Private Limited ("the Corporate Debtor"). 3. The underlying Company Petition in CP (IB) No. 832/KB/2019 was filed by Carbon Resources Private Limited against the Corporate Debtor herein under section 9 of the Insolvency and Bankruptcy Code 2016, which was admitted vide order dated 18.10.2019. 4. The 180-day period of CIRP of the Corporate Debtor had expired on 15.04.2020. After extension of 90 days as well as exclusion of 161 days granted by this Adjudicating Authority vide order dated 05.11.2020, the last date of 270 days of CIRP of the corporate debtor was 29.12.2020. Further an extension of 60 days was granted by this Adjudicating Authority vide order dated 12.02.2020. Thereafter, the last date of the CIRP of the corporate debtor post approval of exclusion of 52 days by this Adjudicating Authority vide order dated 16.03.2021 was further extended to 07.05.2021. 5. Ms. Meena Sureka was appointed as the Interim Resolution Professional ("IRP") vide order dated 18.10.2019. 6. The Applicant herein, Mr. Bijay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions and Aajkaal-Kolkata edition on 18.01.2020. Resolution Professional had sent an email on 07.02.2020 to all the CoC members for further extension of date for submission of Expression of Interest (EOI) for a period of another 21 days i.e., till 02.03.2020. Accordingly, last date of submission of EoI was extended to 02.03.2020 and it was published in Business Standard-all editions and Aajkal-Kolkata edition on 12.02.2020. However, the Applicant was of the view that more Expression of Interests needs to be scouted to reduce dependence over a single applicant. Therefore, the last time submission of EoI was further extended from 12.03.2020 to 19.11.2020 after receipt of approval by email of the Committee of Creditors. This was later ratified in the Ninth Meeting of Committee of Creditors and the Revised Form G was published in Business Standard-Kolkata Edition and Aajkaal- Kolkata Edition on 13.11.2020. 12. The Applicant submits that in response to the invitation for EoI, upto the last date, i.e., 19.11.2020, four EOIs were received. The Applicant issued the final list of prospective resolution applicants on 30.11.2020 wherein four prospective resolution applicants, i.e., Prudent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cut-off date being 22.12.2020 be brought to the attention of the Adjudicating Authority for necessary directions. 15. The interlocutory application for exclusion of 52 days from the CIRP and the application filed by C.P Ispat Pvt Ltd, the Resolution Applicant were taken up for hearing on 16.03.2021. For reasons mentioned in the order dated 16.03.2021, a period of 43 days in submitting the Resolution Plan by the Prospective Resolution Plan was condoned and an exclusion of 52 days was granted from the overall period of 330 days to enable a decision to be taken on the Resolution Plan for the Corporate Debtor. 16. Thereafter the Resolution Professional convened the 12th CoC meeting on 18.03.2021 as directed by this Adjudicating Authority, wherein the Resolution Plan submitted by C.P. Ispat Pvt Ltd was placed before the CoC for consideration. 17. Modifications to the Plan were suggested at the 13th, 14th and 15th CoC meetings. The final revised Resolution Plan was received on 10.04.2021 and was sent to all the CoC members for e-voting. 18. The CoC was informed of the fair market value and liquidation value of the Corporate Debtor, as per the valuation reports, which is as follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) Plan must provide for repayment of debts of OCs in such manner as may be specified by the Board which shall not be not less than amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, whichever is higher and Clause 7(d) at Page 6 of the Resolution Plan. (iii) provides for payment of debts of financial creditors who do not vote in favour of the resolution plan, in such manner as may be specified by the Board. Clause 8(i) at Page 11 of the Resolution Plan. (c) Management of the affairs of the Corporate Debtor after approval of the Resolution Plan. Clause 17(f) at Page 22 of the Resolution Plan. (d) Implementation and Supervision. Clause 17(g) to (o) at Pages 22-23 of the Resolution Plan. (e) Plan does not contravene any of the provisions of the law for the time being in force. Clause 20(b) at Page 26 of the Resolution Plan. (f) Conforms to such other requirements as may be specified by the Board. Provided in the different parts of the Resolution plan II. Measures required for implementation of the Resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Plan Mandatory contents of Resolution Plan in terms of regulation 38 of CIRP Regulations: Ref. to relevant Reg. Requirement How dealt with in the Plan 38(1) The amount due to the operational creditors under a resolution plan shall be given priority in payment over financial creditors. Clause 7(g) at Page 7 of the Resolution Plan. 38(1A) A resolution plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors of the corporate debtor. Clause 20(a) at Page 26 of the Resolution Plan. 38(1B) A resolution plan shall include a statement giving details if the resolution applicant or any of its related parties has failed to implement or contributed to the failure of implementation of any other resolution plan approved by the Adjudicating Authority at any time in the past. Clause 14(b) at Page 18 of the Resolution Plan. 38(2) A resolution plan shall provide: (a) the term of the plan and its implementation schedule; Clause 17(e) at Page 21 of the Resolution Plan. (b) the management and control of the business of the corporate debtor during its term; and Clause 17(f) at Page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (other than Workmen and Employees) 85.33 85.33 0.17 Within 60 days from NCLT Approval date b) Operational Creditors (Workmen and Employees) 0.02 0.02 0.02 Within 60 days from NCLT Approval date c) Other Operational Creditor - - 0.25 Within 60 days from NCLT Approval date Total (Operational Creditors) 85.35 85.35 0.44 Within 60 days from NCLT Approval 3 Financial Creditors 245.55 245.02 19.03 Overall within 18 months from NCLT Approval date, off which Rs8.18crore within 60 days from NCLT Approval Date and Balance 50% of the said amount in the first 9 months and remaining 50% in the next 9 months 4 Govt Dues - - - Total 330.9 330.3 20.7 5 Working Capital _ 1.00 To be infused progressivel y as and when required Total Resolution Fund 21.7 27. 28. The Resolution Plan defines "Approval Date" as the date of approval of this Resolution Plan by the NCLT, or any other applicable Adjudicating Authority. Details on Management/Implementation and Reliefs as per the Resolution Plan - Salient Features 29. The Resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory dues which occur or accrue only as a going concern after the Approval Date. In Ghanshyam Mishra & Sons Pvt Ltd v. Edelweiss Asset Reconstruction Company Ltd, [2021 SCC OnLine SC 313 decided on 13.04.2021.] the Hon'ble Supreme Court held that once a Resolution Plan is approved, a creditor cannot initiate proceedings for recovery of claims which are not part of the Resolution Plan. The provisions of section 32A of the IBC will also apply. Therefore, the reliefs sought for are granted, in terms of the judgment of the Hon'ble Supreme Court in so far as extinguishment of liabilities that are not part of the resolution plan are concerned. 4. The available brought forward losses shall be carried forward in accounts of the Corporate Debtor and the same shall be available for setoff against any credits, gains, write backs if any in the future. This is for the income tax authorities to consider. 5. The available GST credit in the account of the Corporate Debtor shall be carried forward in accounts. Granted. 6. On approval of the Resolution Plan by the NCLT, it shall be deemed that all and any Government approvals required by the Resolution Applicant for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise should not be revived post the order of NCLT. All cases filed against the company should be deemed to be disposed off or withdrawn without any liability either on the company or on resolution applicant. In Ghanshyam Mishra & Sons Pvt Ltd v. Edelweiss Asset Reconstruction Company Ltd, [2021 SCC OnLine SC 313 decided on 13.04.2021] the Hon'ble Supreme Court held that once a Resolution Plan is approved, a creditor cannot initiate proceedings for recovery of claims which are not part of the Resolution Plan. The provisions of section 32A of the IBC will also apply. Therefore, the reliefs sought for are granted, in terms of the judgment of the Hon'ble Supreme Court in so far as extinguishment of liabilities that are not part of the resolution plan are concerned. 9. The Resolution Applicant will acquire control over the Company pursuant to the order of the NCLT and not pursuant to the usual acquisition process which would ordinarily include a detailed due diligence and representation, warranties and indemnities in relation to the affairs of the Company from its Existing Promoters. The Resolution Applicant may take some time to discover all the non-compliances that m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held responsible or liable in relation thereto. By virtue of the order of the NCLT approving this Resolution Plan all new inquiries investigations, whether civil or criminal, notices, suits, claims, disputes, litigation, arbitration or other judicial, regulatory or administrative proceedings will be deemed to be barred and will not be initiated or admitted against the Corporate Debtor in relation to any period prior to the acquisition of control by the Resolution Applicants over the Company or on account of the acquisition of control by the Resolution Applicants over the Corporate Debtor pursuant to this Resolution Plan. There are two parts to this: (1) Liability for prior offences: This is covered by section 32A of the IBC, which lays down that the liability of a corporate debtor for an offence committed prior to the commencement of CIRP shall cease, and the corporate debtor shall not be prosecuted for such an offence from the date the resolution plan has been approved by the Adjudicating Authority under section 31, if the resolution plan results in change in the management or control of the corporate debtor. (2) Liabilities in existence prior to the commencement of CIRP: Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall remain pending or can be given effect to or allowed against the company in India or elsewhere. In Ghanshyam Mishra & Sons Pvt Ltd v. Edelweiss Asset Reconstruction Company Ltd, the Hon'ble Supreme Court held that once a Resolution Plan is approved, a creditor cannot initiate proceedings for recovery of claims which are not part of the Resolution Plan. This is binding law under Article 141 of the Constitution. 16. All proceedings against the Corporate Debtor by an operational creditor in any court of law/forum/panel of arbitrators or any other adjudicating authority in India or elsewhere shall stand dismissed and no fresh/further proceedings can be commenced against the company for any cause of action occurring on or before the date of approval of the Resolution Plan. In Ghanshyam Mishra & Sons Pvt Ltd v. Edelweiss Asset Reconstruction Company Ltd, the Hon'ble Supreme Court held that once a Resolution Plan is approved, a creditor cannot initiate proceedings for recovery of claims which are not part of the Resolution Plan. This is binding law under Article 141 of the Constitution. 17. Any pledges, guarantees, securities created by the Corporate Debtor created for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record. 39. Certified copy of this Order be issued on demand to the concerned parties, upon due compliance. 40. Liberty is hereby granted for moving any application if required in connection with implementation of this Resolution Plan. 41. A copy of this Order shall be filed with the Registrar of Companies, West Bengal. 42. The Resolution Professional shall stand discharged from his duties with effect from the date of this Order, save and except those duties that are enjoined upon him for implementation of the approves Resolution Plan. 43. The Resolution Professional is further directed to hand over all records, premises/ factories documents to the Resolution Applicant to finalise the further line of action required for starting of the operation. The Resolution Applicant shall have access to all the records and premises through the Resolution Professional to finalise the further line of action required for starting of operations of the Corporate Debtor. 44. IA (IB) No.479/KB/2021 and the main Company Petition, i.e., CP (IB) No.832/KB/2019 shall stand disposed of accordingly. 45. The Registry is directed to send e-mail copies of the order forthwith to all th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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