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TMI Blog2018 (7) TMI 2263X X X X Extracts X X X X X X X X Extracts X X X X ..... d below: a. Approve the Final Resolution Plan in terms of Section 31(1) of the code. b. Order that the approval of the Final Resolution Plan shall not extinguish the rights of members of the CoC and the liability of existing promoters of the company under the personal guarantees/sureties/indemnities executed by the existing promoters in favour of the members of CoC and that any subrogation or other rights that the existing promoters of the Corporate Debtor may have against the Corporate Debtor and/or the transferee of assets of the Corporate Debtor shall stand automatically waived and extinguished in full; c. This Hon'ble Tribunal be pleased to pass an order for exemption from payment of any stamp duty in respect of the actions proposed to be undertaken in accordance with the Final Resolution Plan; d. In the alternative to prayer clause (c), this Hon'ble Tribunal be pleased to declare that the order of the Hon'ble Tribunal approving the Final Resolution Plan shall be deemed to be an order of the Hon'ble Tribunal sanctioning a reconstruction and amalgamation of companies under the Companies Act for the sole and limited purpose of payment of the applicable sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvite proof of claims from Public announcement published in Form A Business Standard (both English and Hindi) Delhi edition, The Pioneer (English), Raipur edition, the creditors of the Corporate Debtor. The Public Announcement was also published on the website of the Corporate Debtor. As per regulation 6(1) of the CIRP Regulations, an insolvency professional is required to make a public not later than 3 (three) days from the date announcement As per regulation 6(1) of the CIRP Regulations, an insolvency professional is required to make a of his appointment an as interim resolution The order appointing the professional. Applicant as interim resolution professional was communicated to him on July 24, 2017. Status: Compliant 4. July 31, 2017 2 (two) registered valuers viz. RBSA Valuation Advisors LLP and Knight Frank (India) Private Limited, appointed determine the liquidation value of the Corporate Debtor. As per regulation 27 resolution professional was communicated to him on July 24, 2017, the CIRP Regulations of (existing as on July, 2017), the resolution professional is required to appoint 2 (two) valuers to determine registered the liquidation value of the Corporate Debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining the financial position of the corporate debtor. Status: Compliant 8. August 21, 2018 The first list of creditors and report on constitution of CoC filed with this Hon'ble Tribunal. Due to claim being received from a new financial creditor, the list of creditors was updated and accordingly the CoC was reconstituted. As per regulation 17(1) of the CIRP Regulations, a report certifying the constitution of the CoC is required to be filed to the NCLT on or before the expiry of 30 (thirty) days from the date of this appointment. In the present instance, the order of NCLT! admitting the Company Petition was communicated to the Applicant resolution professional on July 24, 2018. Hence, the last date of submission was August 23, 2018. As per regulation 13(2)(d) of the CIRP Regulations, the list of creditors is required to be filed with this Hon'ble Tribunal. Status: Compliant 9. August 22, 2017 In accordance with regulation 36(1) of the CIRP Regulations (as then existing), information memorandum prepared by the Applicant and shared with members of the CoC. Regulation 36(1) of the CIRP Regulations as it stood then did not prescribe a time period. Subsequently, pursu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 17(1) of the CIRP Regulations. As per regulation 13(2)(e) of the CIRP As per regulation Regulations, the list of creditors is required to be presented at the first meeting of the CoC. Status: Compliant 12. September 13, 2017 Second meeting of CoC held. The Applicant apprised the participants that a list of creditors of the Company, updated as on September 12, 2017, in terms of Regulation 13 of CIRP Regulations was prepared by him and the same was duly circulated by email to all the members of the CoC. The members of the aforesaid list of creditors CoC the took note of Approval given for appointing SBI Capital Markets Limited as the Transaction Advisor Approvals for appointing certain other advisors were also provided. Minutes of second meeting of the CoC is enclosed hereto as Exhibit E. 13. September 16, 2017 The Resolution Professional invited prospective lenders, investors and other persons to submit 'Expressions of Interest' (hereinafter, the ""EOIs") to put forward a resolution plan for the Corporate Debtor. An advertisement inviting EOIs from interested persons was published in Business Standard Hindi and English editions. newspapers in Hindi and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were organized for Raipur and Raigarh plants/facility of the Corporate Debtor. 19. November 17, 2017 Last date for submitting resolution plans. 29A The date for submission of resolution plan was initially extended till November 27, enable the potential submit resolution plans in due compliance of section introduced vide Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017. The above extension of time on both ratified by the CoC in the meeting held on November 30, 2017. Occasions was thereafter, till 2017, to 2017, and December 12. resolution applicants to 29A submit resolution plans due compliance of section introduced vide Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017. The above extension of time on both ratified by the CoC in the meeting held on November 30, 2017. Regulation 39(1) of the CIRP Code Regulations (as it stood then) provided that a applicant resolution shall endeavour to submit a resolution plan 30 (thirty) days before expiry of within the maximum period permitted under section 12 of the; for the completion of the corporate insolvency resolution process. Subsequently, regulation 39(1) of the Regulations substituted by IBBI CIRP was (I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SBI, Financial Creditor had also engaged RBSA Valuation Advisors LLP for ascertaining the enterprise value of the Corporate Debtor. The members of the COC requested the Resolution Professional to circulate the said enterprise value report to all the financial creditors of the Corporate Debtor. CoC was also apprised of the updated list of creditors. Minutes of fifth meeting of the CoC is enclosed hereto as Exhibit H. As per section 12(2) of the Code (as it then), the resolution stood professional shall file an application to the Adjudicating beyond 180 do so by a resolution Authority to extend the period of the corporate insolvency resolution process (one hundred and eighty) days, if instructed to passed at a meeting of the committee of creditors by a vote of 75% (seventy-five) of the voting shares. Pursuant to the recently promulgated Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 on June 6, 2018, the requirement of obtaining 75% (seventy-five percent) of the voting shares has been replaced with 66% (sixty six percent) of the voting shares; however the same is not relevant for the CIRP of the Corporate Debtor. Status: Compliant 23. January 9, 2018 This Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CoC meeting for ratification. In this meeting, the special audit report prepared by Agrawal Anil & Co. Chartered Accountants on transactions as provided in Sections 43, 45, 50 & 66 of the Code was presented to the CoC by Mr. Anil Agrawal, Chartered Accountant. The members of the CoC discussed the report. CoC was also apprised of the updated list of creditors. Minutes of seventh meeting of the CoC is enclosed hereto as Exhibit J. 26. March 1, 2018 The Resolution Applicants submitted a revised resolution plan (hereinafter, the "Resolution Plan"). On the very same day, the Resolution Plan was shared by the Applicant with all the members of the CoC for obtaining their internal approvals. 27. March 26, 2018 The Applicant vide email informed the members of the CoC that a meeting of the CoC will be convened on March 31, 2018. 28. March 27, 2018 Report on bid evaluation for the Corporate Debtor prepared by RBSA Advisor RBSA Advisors opined in the report that the resolution plan submitted by the Resolution Applicants is feasible and viable and it may be reasonable for the CoC to accept the resolution plan. 29. March 27, 2018 This Hon'ble Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Code, application 'filed before this Hon'ble Tribunal seeking approval for the Final Resolution Plan prior to the expiry of 270 (two hundred and seventy) days from the date of the admission of the Company Petition by this Hon'ble Tribunal. Pursuant to the Amendment Regulations issued vide notification dated February 6, 2018, sub- regulation (4) of regulation 39 of the CIRP Regulations was substituted to state that the resolution professional shall submit the resolution plan approved by the committee of creditors at least 15 (fifteen) days before the expiry of the maximum period permitted under section 12 for the completion of the corporate insolvency resolution process. However, the proviso to the said sub-regulation stated that the timeline specified shall not apply to an ongoing corporate insolvency resolution process which has completed 130th day from its commencement date. Since, in the present instance, the corporate insolvency resolution process of the Corporate Debtor had already completed 130 days on such date, hence, the said timeline prescribed in the amended in sub-regulation (4) of regulation 39 of the CIRP Regulations did not apply to the CIRP of the Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oportion to their admitted debt and would undertake deemed automatic conversion of the remaining admitted debt held by the assenting financial creditors into Optionally Convertible Preference Shares (OCPS) which shall be deemed to be purchased by the Resolution Applicant for an aggregate amount of Rs. 219.92 crores and OCPS would thereafter deemed to be extinguished in the manner provided in the Resolution Plan. Having regard to valuation of the assets of the Corporate Debtor company, we have noticed that the fair valuation of the company is almost double to the liquidation value given to the Corporate Debtor. When we have asked as to why so much difference has come in between liquidation value and fair value and how the COC approved the resolution plan that is slightly above liquidation value, the Counsel appearing on behalf of the COC submitted that the COC has approved after thoughtful consideration looking at the upfront payment coming from the Resolution Applicant. In view of the same, though difference between fair value and liquidation value is more than two thousand crores rupees, this Bench, considering the submissions of the Counsel appearing on behalf of the COC and look ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor prior to commencement of CIRP shall stand abated as the liquidation value due to those creditors as per the waterfall mechanism in Section 53 of the Code is NIL, but whereas the Financial creditors and other creditors will continue to be entitled to enforce their rights against the existing promoters of the Corporate Debtor and the existing promoters will continue to be liable in relation to any pending litigation against them. Since the terms in respect to liabilities and obligations of the Corporate Debtor and the right of financial creditors against the promoters of the Corporate Debtor are hereby approved. 12. Until the Corporate Debtor is acquired by the Resolution Applicants, the Corporate Debtor will be managed and controlled by the Interim Board appointed by the Steering Committee approved by the COC. This arrangement is approved by this Bench. 13. The Resolution Applicant proposed to acquire the management and control of the Corporate Debtor on the effective date as mentioned in the Resolution Plan on restructuring the company with the following arrangements: (i) Conversion of part debt into equity; (ii) Reduction of share capital; (iii) Merger; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lan discloses a proposal for a slump sale of non-core assets of this Corporate Debtor to a newly incorporated subsidiary ("Newco"), 100% of the shares of the Newco are proposed to be sold at the fair market value carried out by the independent valuer to any person who is not disqualified under Section 29A of the Code. 19. On looking at this proposal, when this Bench has raised doubts about the Resolution Applicant's immediately selling the Corporate Debtor property on fair market value, as part of this resolution plan, the Resolution Applicant Counsel has given an undertaking that the Resolution Applicant would not sell any of the non-core assets as part of this plan. In view thereof, this proposal of slump sale is hereby not approved by this Bench. 20. As to exemption sought by the Resolution Applicant in respect to approvals from SEBI, it is hereby clarified that whatever approvals required to be taken as per law by the Corporate Debtor, the same shall be taken by the company, no blanket exemption can be given by this Bench in respect to compliance of law. 21. Asto Gare Palma IV/7 mine rights, this Bench having held in a detailed order dated 16.1.2018 that this mine rights ..... X X X X Extracts X X X X X X X X Extracts X X X X
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