9911796707
TMI Blog2022 (10) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... ninth meeting of the CoC held on 14.05.2021 followed by electronic voting which concluded on 02.06.2021. 2. That State Bank of India, a Financial Creditor of the Corporate Debtor, had filed an application under section 7 of the Code, read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, for initiation of the corporate insolvency resolution process (CIRP) against Uttam Galva Steels Limited (Corporate Debtor). 3. That the said application was admitted by this Tribunal, by its order dated 1 October 2020 (Admission Order), in terms of which, Mr. Milind Kasodekar (Registration No. IBBI/IPA- 002/IPN00116/2017-18/10285), the Applicant herein, was appointed as the Interim Resolution Professional (IRP). A copy of the Admission Order is annexed with application as Annexure A. The brief facts leading to the Application are as under: 4. The IRP upon receipt of the Admission Order on 06.10.2020 published a public announcement for initiation of CIRP and invited claims from creditors in Form A on 08.10.2020 in the Free Press Journal (Mumbai edition) (English) and Navshakti (Mumbai edition) (Marathi), along with uploading it on the website of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of email dated 15.12. 2020. The Applicant On 15.12. 2020, issued an addendum to the invitation for EoI in Form G whereby the deadline for submission of EoI was extended to 22 December 2020. 10. In response to the invitation for EoI, a total of 6 (six) Prospective Resolution Applicants (PRA(s)) submitted their EoI, as set out below: (a) AM Mining India Private Limited; (b) Kotak Investment Advisors Limited; (c) JSW Steel Coated Products Limited; (d) Jindal Steel and Power Limited; (e) International Asset Reconstruction Company Private Limited; and (f) ESL Steels Limited. 11. The third meeting of the CoC was convened on 29.12.2020 via video conferencing in compliance with the CIRP Regulations during which, the CoC deliberated and voted on the approval of the draft Request for Resolution Plan (RFRP) and the approval of the draft Evaluation Matrix (Evaluation Matrix). The CoC also ratified and approved the cost of the data room. In the course of the third meeting of the CoC, the terms of the RFRP were discussed in detail including but not limited to the earnest money deposit, the performance security and the right of rejection of resolution plans by the CoC for non-compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80 (One Hundred and Eighty) days was expiring on 31.03.2021. 17. The RFRP, 1 (One) draft resolution plan was received, from AM Mining India Private Limited (Resolution Applicant) accompanied by the eligibility affidavit under section 29A of the Code and undertaking in hard copy as well as soft copy on 19.03.2021. 18. The Applicant convened the sixth meeting of the CoC on 20.03.2021 via video conferencing in compliance with CIRP Regulations. During the sixth meeting of the CoC, the resolution plan dated 19.03.2021 was opened in front of members of the CoC and the Resolution Professional and its advisors. The Resolution Applicant was also present at the time of the opening of the said resolution plan. The CoC also approved the budget for appointment of advisor to verify compliance with section 29A, finalised by e-voting which concluded on 24 March 2021 with 91.34% voting share of the CoC. 19. The CoC convened seventh meeting on 01.04.2021 via video conferencing in compliance with the CIRP Regulations. During the seventh meeting the CoC inter alia, discussed and deliberated on the findings of the valuation reports prepared by valuation agencies as presented by the respective agenci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meeting to evaluate compliance with section 29A of the Code; and (e) The transaction audit report dated 12 May 2021 (TAR) prepared by BDO. 24. During the ninth meeting of the CoC, the Applicant informed the CoC that the Resolution Plan is legally compliant with the provisions of the Code, and the regulations thereunder, and the RFRP and the Resolution Applicant is eligible under Section 29A of the Code. Further, BDO India LLP, the bid evaluation advisor appointed by the CoC, informed the CoC that, (i) the Resolution Plan meets the qualitative and quantitative criteria as indicated in the Evaluation Matrix approved by the CoC during the third meeting of the CoC; (ii) the Resolution Plan is feasible and viable and that the revenue and EBITDA projections under the Resolution Plan are achievable and reasonable; and (iii) the Letter of Commitment provided by the Resolution Applicant confirms the eventuality of the Resolution Applicant honouring the proposed commitment under the Resolution Plan. 25. Thereafter, the Resolution Plan was put to e-voting by the Applicant in terms of regulation 25 of the CIRP Regulations, from 2:00 PM on 17.05.2021 till 12:00 PM on 29.05.2021, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficient to initiate proceedings under section 66 of the Code. 30. 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. 31. The Applicant has also filed the Form H, as per Regulation 39(4) of the CIRP Regulations, 2016 with the Insolvency and Bankruptcy Board of India (IBBI). I. SALIENT ASPECTS OF THE APPROVED RESOLUTION PLAN 32. That the Applicant has set out below, the key terms and conditions of the Resolution Plan: Term of the Resolution Plan 33. The Resolution Plan contemplates that it shall be valid from the date of submission of the Resolution Plan until the Effective Date. The Total Cash Payment shall be made within 60 days from the date on which the Resolution Plan is approved by the Adjudicating Authority. Identification of cause of default and projected business plan 34. The Resolution Plan identifies the possible causes of default and sets out a detailed business plan for turning around the Corporate Debtor in Section V of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im amounts. The Resolution Plan also provides that the amount payable to Operational Creditors shall not be less than the amount payable to the Operational Creditors (as per their class) in the event of liquidation under section 53 of the Code, or the amount that would have been paid to such Operational Creditor, if the amount under the Resolution Plan had been distributed in accordance with priority under section 53(1) of the Code (whichever is higher). C. The Insolvency Resolution Process Costs (as quantified, to the extent possible, and approved by the CoC) and Standstill Period Costs (as quantified, to the extent possible, and approved by the Monitoring Agency) shall be funded from the internal accruals and cashflows in priority over other debts of the Corporate Debtor. If the internal accruals or cashflows of the Corporate Debtor are insufficient to meet the Insolvency Resolution Process Costs and/or the Standstill Period Costs, such costs shall be paid by the Resolution Applicant up to an amount of INR 5 crores (subject to such Insolvency Resolution Process Costs and/or the Standstill Period Costs have being actually and validly incurred by the Corporate Debtor for goods an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill Period, a Monitoring Committee and a Monitoring Agency would be constituted for effective implementation of the Resolution Plan and to assist in the day-to-day operations of the Corporate Debtor, respectively. 39. The Resolution Plan provides a list of activities along with timelines to be undertaken thereafter, for implementation of the Resolution Plan. 40. The schedule for implementation of the Resolution Plan is as follows: Actions Timeline Date on which the last of the necessary regulatory approvals are received for implementation of the Resolution Plan T Effective Date At the sole discretion of the Resolution Applicant but within T + 60 Actions specified in Section IX(B) to be undertaken in relation of implementation of acquisition structure as determined by the Resolution Applicant for transfer of Control and ownership over business of the Corporate Debtor (Acquisition Structure) At the sole discretion of the Resolution Applicant but within T + 60 41. The key steps involved for implementation of the Resolution Plan approval by this Tribunal are as follows: A. Constitution of Monitoring Committee and appointment of Monitoring Agency (as defined in the Resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the above, the Resolution Applicant shall hold 100% (One hundred per cent) of the share capital of the Corporate Debtor and acquire control of the Corporate Debtor; - Dissolution of the existing suspended Board of the Corporate Debtor; - Reconstitution of the Board of the Corporate Debtor by the Resolution Applicant shall reconstitute the Board of the Corporate Debtor on the aforesaid date of dissolution in accordance with Applicable Law; All actions set out in this sub-section (ii) above shall be deemed to take effect simultaneously and the Effective Date shall not occur unless all such actions are consummated. (iii) Pursuant to sub-regulation (3) of regulation 3 of Delisting Regulations, nothing in the Delisting Regulations shall be applicable to the delisting of equity shares of the Corporate Debtor since the Resolution Plan lays down a specific procedure to complete the delisting of the shares of the Corporate Debtor. B. Approvals and Applications The Corporate Debtor, Monitoring Agency, any relevant creditors and the Monitoring Committee shall ensure that the Corporate Debtor, will submit applications with the relevant government authorities related to imple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 29A of the Code has also been independently examined by the Applicant and confirmed to the CoC. Section 30 of the Code Mandatory Contents of the Resolution Plan Section 30(2)(a) of the Code Payment of the Insolvency Resolution Process Cost in priority to the repayment of any other debts of the Corporate Debtor Section IV (Summary Proposal of the Resolution Applicant) Complied Section 30(2)(b) of the Code Details for payment of debts of Operational Creditors that shall not be less than: (i) The amount paid to such creditors in the event of liquidation of the Corporate Debtor (under Section 53 of the Code), (ii) The amount that would have been paid to such creditors, if the amount under the Resolution Plan had been distributed in accordance with the order of priority under Section 53(1) of the Code, whichever is higher and provides for payment of debts of the Financial Creditors, who do not vote in favour of the Resolution Plan, in such manner as may be specified under the Code, which will not be less than the amount to be paid to such creditors in accordance with Section 53(1) in the event of a liquidation of the Corporate Debtor. Section IV (Summary Proposal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akeholders, including Financial Creditors and Operational Creditors, of the Corporate Debtor. Section VII (Treatment of Various Stakeholders) Complied Regulation 38(1B) of the CIRP Regulations Statement as to whether the Resolution Applicant or any of its Related Parties has failed to implement or contributed to the failure of implementation of any other approved resolution plan at any time in the past. Section III.F. (General Information and Information about the Resolution Applicant - Declarations as required by the RFRP) Complied Regulation 38(2)(a) of the CIRP Regulations Term of the Resolution Plan and schedule for implementation. Section VI (Term of the Resolution Plan) and Section IX (Implementation Schedule, Supervision of Implementation Plan and Management) Complied Regulation 38(2)(b) of the CIRP Regulations Management and control of the business of the Corporate Debtor after approval of the Resolution Plan of the Resolution Applicant by the Adjudicating Authority. Section IX (Implementation Schedule, Supervision of Implementation Plan and Management) Complied Regulation 38(2)(c) of the CIRP Regulations Adequate means for supervising implementation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the orders, if any, of the adjudicating authority in respect of such transactions Section III.F (General Information and Information about the Resolution Applicant) and Annexure I of the Resolution Plan Complied Regulation 39(4) of the CIRP Regulations Evidence of receipt of performance security required under subregulation (4A) of regulation 36B. Annexure 12 of the Resolution Plan Complied 45. The Applicant submits that the Applicant has preferred this present application in furtherance of the Applicant's duties as the Resolution Professional of the Corporate Debtor and the Applicant submits that the Applicant has complied with all the applicable regulations towards discharge of his functions as the Resolution Professional of the Corporate Debtor. The Applicant further submits that the Resolution Plan of the Successful Resolution Applicant has been prepared in compliance of the Code and all the requisite Regulations which was been approved by the required majority of the CoC. 46. On perusal of the Resolution Plan, it is observed that the Resolution Plan provides for the following: a) Payment of CIRP Cost as specified u/s 30(2)(a) of the Code. b) Repayment of Debts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w for the time being in force; f) Confirms to such other requirements as may be specified by the Board. 49. 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. 50. 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 requirements. 51. The R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, the Creditors are at liberty to proceed against the Personal Guarantors. The approval of the Resolution Plan does not bar the Creditors to proceed against the Personal Guarantors. 56. In view of the discussions and the law thus settled, the instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 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. The same needs to be approved. Hence ordered. ORDER The Application IA No. 1271 of 2021 in CP 920 of 2020 be and the same is allowed. The Resolution Plan annexed to the Application is hereby approved. It shall become effective from this date and shall form part of this order. i. It shall be binding on the Corporate Debtor, its employees, members, creditors, 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. Further in terms of the Judgment of Hon'ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
