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TMI Blog2019 (4) TMI 2175X X X X Extracts X X X X X X X X Extracts X X X X ..... he said Petition was Admitted vide an Order dated 06.02.2018 (CP No.1554/I&BP/NCLT/MB/2017). Ms. Charu Desai was appointed as IRP. 3. The applicant submits that the resolution applicant is a consortium of two companies, namely M/s. Khilari Infrastructure Pvt. Ltd. and M/s Topnotch Chemicals Pvt. Ltd. M/s. Topnotch is the current supplier of the Corporate Debtor and M/s. Khilari is engaged in the business of solid waste management. 4. It is stated that the Resolution Plan submitted by the Resolution Applicant has been approved by the Committee of Creditors ('CoC') by a vote of 77.8% (being more than 66% as laid down in Sec.30(4) of the Code) of the voting shares, during e-voting held between 26-30 October, 2018. CoC consists of eighteen Financial Creditors. An Information Memorandum, was prepared by the RP and provided to all CoC members on 07.04.2018. Expression of Interest was invited from prospective Resolution Applicants for submission of Resolution Plans for the Corporate Debtor by way of an advertisement which was published in 'The Economic Times' newspaper on 12.04.2018 and was also put on the website of the Corporate Debtor. A revised EOI was published on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of Maharashtra 4,383.39 4,371. 10 12 UCO Bank 3,624.32 3,624.32 13 SBI Global Factors 1,061. 50 1,061.50 14 Bank of Bahrain and Kuwait 924. 90 924. 90 15 Dena Bank 865. 00 865.00 16 Indian Bank 870. 38 800. 83 17 Kotak Mahindra Bank 802. 32 797. 93 18 Can Bank Factors (unsecured) 314.85 314.85 Total 142, 081. 48 141, 834. 83 Note: This is as per the claim sheet given in the Data Room / Information Memorandum. The total amount given in the provisional balance sheet as on 31st March 2018 is INR 1,421.04 Crores. 2. Trade Payables (forming part of Operational Creditors) (in INR Lacs) S. No. Name of Vendors Claim Submitted Admitted Amount 1 CSPC OUYI Pharmaceutical Co. Ltd 1,871.43 1,488.67 2 Nexchem Pharmaceuticals Co. Ltd. 276. 69 276.69 3 Aromatic and Industrial Chemicals Limited 233. 39 59. 18 4 AtulImpexPvt Ltd 164. 18 24.99 5 Jiangsu Guotai International Group 104.41 103.00 6 Jivraj Chemicals Industries Pvt Ltd 49.10 38.84 7 Sequent Scientific Ltd. 33.45 17.15 8 Blossom Freight Forwarding (India) Pvt. Ltd. 24.53 13.57 9 Shree Ganesh Decorators And Caterers 17.95 14.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohit Chemical & Pharmaceuticals 0. 57 0. 57 68 Ash Traders 0. 48 0.47 69 Daman Research & Testing Center 0.46 0. 46 70 Gaurav Composite Containers 0. 38 0. 38 71 Petroleum Engineers 0. 36 0. 36 72 UNIPHOS ENVIROTRONIC PVT. LTD. 0. 35 0. 20 73 Suresh D Shenoy 0. 34 0. 29 74 MANAVI COMPUTER 0. 33 0. 32 75 UmapatiMahadev Transport Co. 0. 32 0. 32 76 Ambika Xerox Center 0. 32 0. 32 77 Adarsh Bearing Private Ltd. 0. 30 0. 30 78 Sonal Services 0. 30 0. 27 79 Numex Chemical Corporation 0. 29 0. 29 80 Ravindra J Agarkar 0. 28 0. 14 81 Rushabh Rent A Car 0. 25 0. 22 82 Snow White Power Laundry 0. 23 0. 18 83 Accurate Gases & Equipment 0. 21 0. 21 84 PRIMARK TRAVEL HOUSE PVT. LTD. 0. 14 0. 13 85 The Solution 0. 13 0. 13 86 Ion Exchange 0. 10 - 87 Hazel Mercantile 0. 05 - 88 Global Chromatography 0. 05 0. 05 Grand Total 2,906.17 2, 145.48 Note: This is as per the claim sheet given in the Data Room / Information Memorandum. The total amount given in the provisional balance sheet as on 31st March 2018 is INR 35.35 Crores. 3. Employee Dues forming a part of Operational Creditors The total claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emorandum. The total amount given in the provisional balance sheet as on 31st March 2018 is INR 18.75Crores 6. Residuary Liabilities Apart from the aforementioned, the Company has the following liabilities: Other residuary liabilities S. No Particulars Amount (in INR Lacs) 1 Creditors for Fixed Assets 25.78 2 Security Deposit 1.50 3 Advanced received from customers 127.18 4 JB Khokhani& Co.(Bailor Bailee Arrangement) 92.21 5 Other outstanding expenses 104.10 Total 628.91 Note: The above table is as per the provisional financials of FY 2017-18 DETAILS OF THE RESOLUTION APPLICANT The resolution applicant is a consortium formed by M/s Khilari Infrastructure Private Limited ("Khilari") and M/s Topnotch Chemicals Private Limited ("Topnotch") vide a consortium agreement dated August 27, 2018 (collectively, "Resolution Applicant"). Further details of each member of the consortium is being provided hereinbelow. 1. KHILARI: Khilari, is a private limited company incorporated under the (Indian) Companies Act, 1956 having its registered office at 101 Prabhat Centre, Sector-1A, Belapur, Mumbai 400614 with CIN U45200MH2005PTC152495. Khilari is registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven below: S. No. Name of the shareholder Percentage (a Mr. Khandu Varal 26.84% (b Mr. Vasant Jain 26.84% (c Mr. Mohanlal Jain 10.56% (c Mrs. Sangeeta Varal 17.88% (e Mrs. Pinky Jain 17.88% TOTAL 100.00% B. Promoters and Directors of Topnotch: The current directors and promoters of Topnotch are (i) Mr. Khandu Varal; and (ii) Mr. Vasant Jain. The (i) certificate of incorporation; (ii) memorandum of association; (iii) articles of association of Topnotch and (iv) certificate from a chartered accountant confirming the shareholding pattern of Topnotch are hereto enclosed collectively as Annexure 3. 3. DISCLOSURE WITH RESPECT TO RESOLUTION APPLICANT AND CONNECTED PERSONS In terms of Regulation 38(3) of the CIRP Regulations, following are the connected persons of the Resolution Applicants: 1.1.1 Khilari S. No. Name of Connected Persons Legal Status Relationship 1. Mr. Aayush Sahebrao Khilari Individual Director in Khilari 2. Mrs. Anjali Sahebrao Khilari Individual Director in Khilari 3. Mr. Sahebrao Sukhdeo Khilari Individual CEO of Khilari 4. Labh Neo Age Developers Pvt. Ltd. Private limited company Mr. Sahebrao Khilari is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign law applicable to it); 4. The Resolution Applicant and connected persons are not identified as a wilful defaulter by any bank or financial institution or consortium thereof in accordance with the guidelines of the Reserve Bank of India (or under similar foreign law applicable to it); 5. The Resolution Applicant and connected persons are not debarred from accessing to, or trading in, securities markets under any order or directions of the Securities and Exchange Board of India (or under similar foreign law applicable to it); and 6. The Resolution Applicant and connected parties have not conducted any transactions with the Company other than supplying raw materials against purchase order in the preceding two years. FUNDING/ REPAYMENT/ RESTRUCTURING OF DEBT AND FUTURE PLANS 1. SUMMARY OF CLAIMS TO BE ADDRESSED UNDER THE PLAN As per the Information Memorandum, the admitted claims of various classes of creditors are as follows: S.No Claimant Claim Admitted (In INR Lacs) 1. Financial Creditors 1,41,834.83 2. Operational Creditors - Employee and Workmen 628.91 3. Trade Payables (forming a part of operational creditors) 2,145.48 4. Related Party Claims 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nil Financial Creditors (B) Financial Creditors 1,418.35 68.30 68.30 17 50% to be paid within 30 days from Closing date. 18 Balance 50% to be paid within 60 days from the Closing Date Nil Operational\ Creditors (C) Employee and Workmen 6.29 4.83 INR 1.16 (within 30 days from the NCLT Approval Date) 1. Gratuity Payment of INR 2.56 Crores to be paid on accrual basis 2. INR 1.11 towards outstanding salary shall be paid on discharge from Employment or within 2 years from Closing Date, whichever is earlier. Statutory liabilities other than Statutory Liability towards Workmen and Employees 118.51 2.50 INR 2.50 (within 60 days from the Closing Date) Nil Liability towards Operational Creditors (Other than Employee Liabilities) and Residuary Liabilities 24.95 0.70 INR 0.70 (within 60 days from the Closing Date) Nil Sum to be infused by the Company (E) Total sum to be introduced (INR in Crores) Upfront (INR in Crores) Balance payment (INR in Crores) Working capital 37.00 A. 20.00 - brought in as Non Fund based limit by lead partner (Bank Certificate Attached) B. 17.00 - OCD Consideration Nil Capital expansion 10.00 10.00 - OCD Conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. 'Clean' trade receivables available with Resolution Applicant - INR 49.37Crores 4. Mr. Sahebrao Khilari would infuse amount upto INR 24.91Crores (Net worth of Mr. Khilari as on 31st March 2017 is INR 24.91Crores) Further, documents are enclosed as proof of funds collectively in Annexure 5. 4. DETAIL OF PAYMENTS TO BE MADE BY THE RESOLUTION APPLICANTS: a. CIRP Costs The Resolution Applicant proposes that outstanding CIRP Costs be paid out of the Share Subscription Consideration and OCD Consideration, in priority to the repayment of any other claims. It is envisaged that CIRP Cost will be paid on actual basis. b. Payments to Financial Creditors a. As on Insolvency Commencement Date, the admitted claims of Financial Creditors is INR 1,418.35 Crores while the amount outstanding towards promoters and related parties is INR 106.41 Crores. The Resolution Applicant proposes to make a payment of INR 68.30 Crores ("FC Payment") to settle the admitted claims of the Financial Creditors in the following manner: Financial Creditor Admitted Claim as per Claim Sheet (INR in Crores) Total Payment (INR in Crores) OCD Consideration (INR in Crores) Balance Payment (INR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents to them. All such claim, whether past, present or future shall stand waived, discharged and settled completely with effect from the NCLT Approval Date. g. Upon payment of the upfront amount to the Financial Creditors as stipulated in Part C of this Chapter IV, the entire liability of the Company towards Financial Creditors (including but not limited to in respect of payment of principal, interest, delayed interest, default interest, damages and charges) shall stand extinguished and satisfied, pursuant to the NCLT Approval Order, without any further action on part of any Person, and neither the Company, nor the Resolution Applicant shall be liable or responsible for making any payments to the Financial Creditors.The Financial Creditors shall be entitled to recover any part of the above debt, from the erstwhile promoters / personal guarantors of the Company. h. As far as the Company and Resolution Applicant are concerned, upon payment of the upfront amount to the Financial Creditors as stipulated in Part C of this Chapter IV, all claims, whether past, present or future shall stand waived, discharged and settled completely with effect from the NCLT Approval Date. i. In cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te majority and approved by NCLT shall be binding on the Resolution Applicant. 1. Notwithstanding anything contained herein, payment to the Financial Creditors as per this Resolution Plan will not be reduced on crystallisation of any other contingent liability in respect of the Company. c. Payment To Operational Creditors (Workmen and Employees) a. The total liability of the Company towards Workmen and Employees as per the claim sheet above is INR 6.29 Crores (including Net Salary, Leave Encashment, Bonus, PT, PF, TDS and Gratuity) whereas, as per the provisional balance sheet of the Company as on March 31 2018, the estimated liability towards workmen and employees is INR 4.01 Crore. b. Out of the INR 6.29 Crores, INR 1.16 Crores is Statutory Liability towards PF, PT and TDS and INR 2.56 Crores is towards Gratuity and INR 1.11 Crores towards Net Salary. Break up given below as given below: Liabilities Towards Workmen and Employees S.No. Statute Total Liabilities - as on CIRP Commencement Date (INR in Crores) Share of Payment to be made (INR in Crores) 1 Employee and Workmen TDS ** 0.38 0.38 2 Employee and Workmen PF ** 0.74 0.74 3 Employee and Workmen Prof Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settlement of all workmen and employee dues (including pertaining to payment of salary, bonus, leave encashment, terminal benefits, statutory contributions and any other statutory liability) for the period prior to the CIRP commencement date. Except for Workmen and Employee Payment, the Company and the Resolution Applicant shall not be in any manner whatsoever at any point, present or future, be directly or indirectly responsible or liable for any claims with respect to workmen dues which relate to a period prior to CIRP commencement date. All balance dues, whether in past, present or future other than what is provided for in the clause 3.3 above, pertaining to the workmen and employee of the Company, for the period prior to the CIRP commencement date, shall stand settled in the manner set out above. f. In consideration of Workmen and Employee Payment, all the litigations/ proceedings by employees/ workmen or before any labour department for non-payment of any dues/ contribution or any other moneys shall be withdrawn and stand dismissed accordingly and the Company shall no longer be required to make any payments in relation to such litigations/ proceedings. g. In case any stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant Governmental Authority and /or before appellate authorities. While the Resolution Applicant is not aware of the liquidation value of the Company, for the purpose of this Resolution Plan, the underlying assumption of the Resolution Applicant is that the liquidation value due to the Operational Creditors (Statutory Liabilities) in accordance with the liquidation waterfall under the Code is NIL. Accordingly, the requirement of Section 30(2)(b) of the Code to pay atleast liquidation value to Operational Creditors (Statutory Liabilities) does not apply in this case. Inspite thereof, the Resolution Applicants are ready and willing to pay a sum of INR 2.50 Crores within 60 days from Closing Date towards all statutory liabilities (Other than the Statutory Liabilities towards the Workmen and Employees), to be paid to each respective person proportionately to their respective dues ("Statutory Payments"). Further, as per Regulation 38(1) of the CIRP Regulations, the amount due to the Operational Creditors shall be given priority in payment over the Financial Creditors. Table setting out the details of all statutory liabilities of the Company as disclosed in the Data Room along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal had ordered investigation of various companies for non-compliance of certain environmental laws. Pursuant to the order passed by the National Green Tribunal, the Company was investigated by the officers of the Maharashtra Pollution Control Board. Proceeding for closure of business of the Company has been initiated by the relevant authorities against the Company due to non-compliance of environmental laws by the Company ("Environmental Proceeding"). All claims and proceedings, orders, litigation or instructions issued by any Governmental Authority in respect of the Environmental Proceeding shall be withdrawn and stand dismissed accordingly and the Company shall no longer be required to make any payments in relation to such litigations/ proceedings. b. Other Contingent Liabilities: i. All and any claims, interest, rights, liability, present or future, that may exist, or may arise upon the Company upto the NCLT Approval Date, save and except the liabilities specifically dealt with in this Chapter, shall stand waived, discharged, released, extinguished and settled without any consequences and/or liability (tax, interest, fine, penalty, etc.) to the Company or the Resolution A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Company by any Related Party and all liabilities of the Company towards any Related Party, as on and for the period prior to Closing Date, shall stand waived, discharged, released and extinguished automatically, as on the Closing Date, pursuant to the NCLT Approval Order, without any further action or step on the part of any Person. The Resolution Applicant or Company shall not, in any manner whatsoever, at present or in future, be directly or indirectly responsible or liable for such claims/liabilities. e. Treatment Of Ongoing And New Litigation i. All inquiries, investigations, notices, causes of action, suits, claims, disputes, litigation, arbitration or other judicial, regulatory or administrative proceedings against the Company initiated by any Person (including contingent liabilities), whether forming part of admitted claims or not, present or future, in relation to any period prior to the NCLT Approval Date shall stand withdrawn, settled and extinguished qua the Company and accordingly, all such proceedings, inquiries, investigations, etc. against the Company shall be disposed of and all liabilities or obligations in relation thereto, whether or not set out in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to the provisions of the Code), whether civil or criminal, that may be initiated or instituted post the approval of the Resolution Plan by the Adjudicating Authority on account of any transactions entered into, or decisions or actions taken by, such erstwhile promoters, Shareholders, managers, directors, officers, employees, workmen or other personnel of the Company, and the Company or the Resolution Applicant shall at no point of time be, directly or indirectly, held responsible or liable in relation thereto. f. Dues of any person during CIRP: The Resolution Plan has been made on the assumption that all dues incurred by the Resolution Professional (on behalf of the Company) or by the Company during the CIRP, apart from the CIRP Costs specified in Part C and Part D of Chapter IV above, have been or will be paid out of the cash flows of the Company. Therefore, except for CIRP Costs specified in Part C of Chapter IV, any liabilities and/ or claims that arise between the Insolvency Commencement Date and the NCLT Approval Date shall stand waived, extinguished, abated, discharged in perpetuity as on the NCLT Approval Date, pursuant to the NCLT Approval Order, except any liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding and outstanding from the Company towards Financial Creditors (including but not limited to in respect of payment of principal, interest, delayed interest, default interest, damages and any other charges) and all such dues have extinguished. Further the "Letter of Confirmation" to state that notwithstanding anything to the contrary stated in the Indian Contract Act, 1872 or in this Resolution Plan, the securities and guarantees/contractual comforts provided by erstwhile Shareholders/ erstwhile promoters in respect of the debt of the Company (except any Encumbrance on the Equity Shares) has not been extinguished. It is hereby clarified that the said Letter of Confirmation shall have no impact on the securities and guarantees/contractual comforts provided by erstwhile Shareholders/ erstwhile promoters in respect of the debt of the Company (except any Encumbrance on the Equity Shares). 4. Additionally, all the original documents pertaining to immovable assets currently in the custody of the Financial Creditors shall be duly handed over to the Company. 5. After the payment to the Financial Creditors, necessary steps shall be taken by the Financial Creditors to update CIBIL and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company, it is proposed that all claims against the Company, with respect to or related to Calyx Guarantee (including by the Bank of Oman, its assignee, by any party claiming subrogation etc) and from any contractual arrangements with Bank of Oman, whether set out herein or not, whether admitted or not, due or contingent, asserted or unasserted, present or future, whether or not set out in the Information Memorandum, the balance sheet or the books of accounts of the Company, in relation to any period prior to the Closing Date, will be written off in full and will be deemed to be permanently extinguished by virtue of the NCLT Approval Order and the Resolution Applicant and the Company shall, at no point, be made directly or indirectly responsible or liable for the same. Accordingly, the Calyx Guarantee shall stand automatically released and discharged on the NCLT Approval Date. 7. INTERESTS OF ALL STAKEHOLDERS The Resolution Plan proposed by the Resolution Applicant adequately deals with the interests of all stakeholders, including Employees and Workmen, Financial Creditors and Operational Creditors, of the Company, in the following manner: 1. Employees/Workmen: The workmen an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, default interest, damages and charges) shall stand extinguished pursuant to the NCLT Approval Order, without any further action on part of any Person, and neither the Company, nor the Resolution Applicant shall be liable or responsible for making any payments to them. All such claim, whether past, present or future shall stand waived, discharged and settled completely with effect from the NCLT Approval Date. 8. CLAIMS BY THE COMPANY All existing and future claims by the Company and all its existing and future rights, entitlement, etc. with Governmental Authorities or any other Person (including third parties) shall not be affected and shall continue to remain enforceable after the NCLT Approval Date. Nothing in this Resolution Plan shall be deemed to affect the rights of the Company to recover from and/or assert claims or rights against any Person and there shall be no set off of any such amounts recoverable by the Company. No liability of a third party towards the Company shall stand extinguished, settled, waived, reduced, or dealt with any manner to the prejudice of the Company, pursuant to this Resolution Plan. 9. HANDOVER OF ASSETS All movable and immovable fixed ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age the existing networks and relationships; and to market the additional production after acquisition of the Company. b. Of the total product range, over 70% of the Company revenues are generated from following 3 product verticals: 1. Anti-Tuberculosis, 2. Anti- Malaria and 3. Antibiotics; which is already a forte for the Resolution Applicant as it has a combined experience of over 25 years in this field of business, thus possessing the requisite knowledge and experience required to succeed in the business of the Company. c. Moreover, the Resolution Applicant plans to retain all the existing employees from erstwhile management by settling their dues. This will help in seamless transition for reviving the Company. d. The Resolution Applicant would also infuse INR 10 Crores for refurbishment of fixed assets and additional INR 37 Crores towards meeting the working capital requirements. e. Topnotch is an existing supplier of intermediate chemicals to the Company and this acquisition will be a forward integration for the Resolution Applicant. f. This will in turn result in having cost synergies for both Company and the Resolution Applicant, which will help the Company in acqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner: 1. On the Closing Date, 1,00,000 New Equity Shares of INR 10 face value will be issued by the Company to the Resolution Applicant and their nominees, free from any Encumbrance, in the following manner: S.No . Shareholders No. of shares (Face Value Rs. 10each) % Holding 1. Khilari 51,000 51% 2. Topnotch 48,600 48.6% 3. Mr. SahebraoKhilari 100 0.1% 4. Mrs. Anjali S. Khilari 100 0.1% 5. Mr. Aayush S. Khilari 100 0.1% 6. Mr. Vasant Jain 100 0.1% 7. Mr. Khandu Varal 100 0.1% TOTAL 1,00,000 100.00% 8. On the day of issuance of New Equity Shares as mentioned above and simultaneously with the issuance, the entire Equity Shares of the Company, held by the existing Shareholders shall stand cancelled. 9. All the assets, properties, rights and interests of every kind, nature and description, tangible or intangible, and wherever situated and by whomsoever possessed or held, that are owned, used, occupied or held by or for the benefit of the business of the Company or even otherwise by or on behalf of the Company shall remain to be so owned, occupied or possessed, as the case may be, as on the Insolvency Commencement Date of the Company and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 6. Between the NCLT Approval Date and Closing Date, the existing Board of Directors of the Company shall remain suspended and the Monitoring Agency shall manage the day to day affairs of the Company. The Monitoring Agency shall also have the responsibilities of the Board of Directors and shall be entitled to undertake corporate action/ pass resolutions for implementation of the Resolution Plan (including issuance and reduction of share capital and appointment of directors). On and from the Closing Date, all the existing Directors, shall vacate their respective offices. On the Closing Date, a new Board of the Company shall be formed by the Resolution Applicants in the manner provided in Chapter VI. 7. On the Closing Date, the Resolution Applicant shall appoint the statutory and internal auditor of the Company, in accordance with the Applicable Law. 8. The Company will continue with the existing employees and may employ new employees /workmen to carry on the business of the Company after the Closing Date, in accordance with Applicable Law. 9. The Resolution Applicant shall provide to the Financial Creditors, Income statement for the 1st year after the NCLT Approval Date and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmat XIII attached with the Resolution Plan) j. addresses the interests of all stakeholders (including Financial Creditors, Operational Creditors and other creditors, guarantors, members, employees and other stakeholders of the Company. (See Part G of Chapter IV of this Resolution Plan) 2. The Resolution Plan demonstrate that - a. it addresses the cause of default The company went into stress owing to the following reasons: 1. In order to succeed in the Contract Research and Manufacturing Services business, the Company made accumulated expenditure (capital expenditure and regular expenses) of more than INR 110 Crore during FY 2008-2009-FY 2012- 2013 in its research and development infrastructure which did not yield the desired results. 2. In September 2012, the Company filed for an initial public offering (IPO) to raise fund which could not fructify due to continued subdued state of the IPO market and not getting the necessary permission from the erstwhile Foreign Investment Promotion Board (FIPB). It led to dependence on high cost debt to fund the business. 3. In FY2013, key customers of the Company like Arch Pharma, Avon Life Sciences, Unimark Remedies, Sharon, Ind- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any major expenditure towards R&D over the next 5 years as the management believes that there is an immense potential to market the current product portfolio of the company, without incurring further sunk costs c. it has provisions for its effective implementation; (See Part B and C of Chapter VI of this Resolution Plan) d. it has provisions for approvals required and the timeline for the same; and (See Part D and E of Chapter VI of this Resolution Plan) e. the resolution applicant has the capability to implement the resolution plan. (See Part C and J of Chapter IV of this Resolution Plan) 7. IMPLEMENTATION OF THE PLAN Under the Resolution Plan, all payments (as outlined in Chapter IV), shall be made within a period of 60 days from the Closing Date unless otherwise specified in this Resolution Plan. Hence, the term of the Resolution Plan shall be 60 (sixty) days from the Closing Date. The plan shall be implemented in the following phases: 1. Prior to Closing Date; 2. On Closing Date; and 3. Post-Closing Date; Monitoring Agency 1. In order to ensure that the Resolution Plan is implemented in accordance hereof and that the obligations undertaken herein are adhere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rified that until the Closing Date, the Company or the Monitoring Agency shall not make any payments (including interest) towards the claims of the Financial Creditors, Operational Creditors or the other creditors except those claims arising out of the liabilities incurred in ordinary course of business of the Company during the period from Insolvency Commencement Date to Closing Date. 9. The Company and all its facilities shall continue to receive supply of essential goods and services (as defined under the Code and the CIRP Regulations) on an uninterrupted basis, and shall not be for any reason shut down or restricted in activities in any manner. The Monitoring Agency shall be entitled to make an application to the Adjudicating Authority directing local law enforcement authorities and local district administration authorities to maintain law and order with regard to various premises owned and/ or used by the Company, and to assist in the implementation of the Resolution Plan. The Committee of Creditors, the Monitoring Agency, the Company, its existing management, employees, Shareholders and creditors shall provide all necessary cooperation as shall be required for obtaining the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Resolution Applicants and their nominees; 5. the name of the Resolution Applicant and their nominees who are the new shareholders in the Company, is entered into the register of members of the Company; 6. two independent directors nominated by the Resolution Applicants and (i) Mr. Aayush Khilari; (ii) Mrs. Anjali Khilari; (iii) Mr. Khandu Varal and Mr. Vasant Jain, shall be appointed to the Board of directors of the Company; 7. the resignation of the existing directors from the Board of directors of the Company is taken on record; 8. the amended memorandum of association and amended articles of association are approved and adopted, if any; 4.2.2 The Company shall convene a meeting of its new shareholders and do all other acts as may be required to give effect to the terms of this Resolution Plan; 4.2.3 All power of attorney/ies and/ or other corporate authorisations or mandates issued by the Company to any person to enable such person to carry out various functions of the Company, to sign and execute various documents and/ or represent the Company, and to operate the bank accounts of the Company shall stand revoked with immediate effect, and the re-constituted boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of the Company. 6. APPROVALS REQUIRED FOR THE PLAN AND COMPLIANCE WITH LAW 1. NCLT Approval The Resolution Plan of the Applicant shall be required to be approved by the Committee of Creditors, and thereafter, by the Adjudicating Authority under Section 31of the Code. 2. Companies Act 2013 Pursuant to the Explanation to section 30(2)(e) of the Code, if any approval of shareholders is required under the Companies Act, 2013 or any other law for the time being in force for the implementation of actions under the resolution plan, such approval shall be deemed to have been given and it shall not be a contravention of that Act or law. 3. INDICATIVE TIMELINE FOR IMPLEMENTATION S. No. Event Timeline NCLT Approval Date X :selected: Closing Date to include inter alia: I. Issuance of New Equity Shares II. Cancellation of existing Shares III. Re-constitution of the Board of Directors X + 10 = Y Payment of CIRP Costs X +30 Payment to Operational Creditors (workmen and employees, as set out herein) X +30 Payment of 50% of the FC Payment to Financial Creditors Within Y + 30 OCD issuance and infusion of OCD Considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - compliances of Applicable Law by the Company. Further, the relevant Governmental Authorities will provide a reasonable period of time after the Closing Date, for the Resolution Applicant to assess the status of any non-compliances under the Applicable Laws including and to procure that the Company regularizes such non-compliances under the Applicable Law existing prior to the Closing Date. (c) The Department of Registration and Stamps of the relevant state and the Ministry of Corporate Affairs shall exempt the Resolution Applicant and the Company, from the levy of stamp duty and fees applicable in relation to this Resolution Plan and its implementation including but not limited to reduction of share capital of the Company, issuance of Equity Shares, issuance of OCDs, and documentation in relation thereto. (d) The concerned State Revenue/Stamp Authorities are requested to waive penalties for non-registration any inadequate/non stamping of the documents executed by the Company included but not limited to the documents in connection with the implementation of this Resolution Plan. (e) Notwithstanding the terms of the relevant agreements with the suppliers/customers of the Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. (k) Waiver from the requirement of obtaining a no objection certificate under Section 281 of the Income-tax Act, 1961 and provisions of taking over predecessor's tax liability under Section 170 of the Income-tax Act, 1961 Act shall not be applicable. (l) The Company and the Resolution Applicant shall be granted an exemption from all taxes, levies, fees, transfer charges, transfer premiums, and surcharges that arise from or relate to implementation of the Resolution Plan, since payment of these amounts may make the Resolution Plan unviable. (m) To the extent not paid and settled under this Resolution Plan, waiver of any income-tax and Minimum Alternate Tax (MAT) liability or consequences (including interest, fine, penalty, etc) on the Company, Resolution Applicant and its shareholders on account of various steps as proposed in the Resolution Plan, including but not limited to liabilities if any under Section 56, Section 43, Section 28, Section 115JB and Section 79 of the Income-tax Act, 1961, including, without limitation (A) waiver of any Tax or MAT liability to the Resolution Applicant on account of purchase of Equity Shares of the Company from the Shareholders in acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Maharashtra Sales Tax Act; 1.3 Liability under on-going/pending income-tax proceedings before Assessing Officer and/or before Appellate Authorities as under: Sr. No. Financial Year Assessment Year Amount (in Lakhs) 1 2004-05 2005-06 0.11 2 2007-08 2008-09 7.37 3 2008-09 2009-10 47.11 4 2009-10 2010-11 69.65 5 2011-12 2012-13 77.67 6 2012-13 2013-14 1,583.89 7 2008-09 2009-10 3.62 8 2005-06 2006-07 43.29 Total 1,832.71 (r) From the NCLT Approval Date, all inquiries, investigations and proceedings, whether civil or criminal, suits, claims, disputes, proceedings in connection with the Company or affairs of the Company, including proceedings before Debt Recovery Tribunal and consumer courts or any other court, pending or threatened, present or future in relation to any period prior to the NCLT Approval Date, or arising on account of implementation of this Resolution Plan shall stand withdrawn and dismissed and all liabilities and obligations therefore, whether or not set out in the balance sheets of the Company or the profit and loss account statements of the Company will be deemed to have been written off fully, and permanent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding but not limited to the Information Memorandum and other documents available in the Data Room are true and correct; 2.2 This Resolution Plan is confidential, and the Resolution Professional, the Committee of Creditors, the Company and their respective Affiliates, directors, officers, employees, agents, advisors, and representative shall not, without the prior written consent of the Resolution Applicants, make any disclosure of any information pertaining to this Resolution Plan, or the Resolution Applicant, or any information which is provided by us or our representatives, to any person (except to their own representatives, who shall maintain confidentiality with respect to any such information), except where such disclosure or announcement is required under Applicable Law and prior written notice thereof has been provided to the Resolution Applicants. 2.3 The Company has not availed of any interim finance during the CIRP period; 2.4 All dues and payables arising in connection with the operations of the business of the Company during the CIRP Period were duly discharged in accordance with Applicable Law and agreed contractual terms pertaining to such dues and payables; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iated against the Company and/ or a change in control of the Company has been effected). However it is clarified that all claims of the Company against such counter parties (and all liabilities of such counter parties towards the Company) shall remain outstanding, due and payable in accordance with their terms. It is clarified that any agreements, arrangements between the Company and any counterparty, including but not limited to banks/ Financial Creditors or Governmental Authorities, for payment relating to margin requirements or deposits shall continue in full force and effect and shall remain valid and binding against the Company and the relevant counterparty(ies). The benefit of any deposit amount, margin payments or any other payments made by the Company pursuant to the aforementioned arrangements or agreements shall continue to be available to the Company. 2.12 Pending occurrence of the Closing Date, no Financial Creditor shall be entitled to take, initiate or continue any steps or proceedings against the Company or its assets (whether by way of demand, legal proceedings, alternative determination process (including arbitration or an expert determination process), the lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable Law (including Code and the CIRP Regulations)to the best of the knowledge of the Resolution Applicant. 4. Negotiations and Modification of the Plan 1. The Resolution Applicant would be happy to meet with the Resolution Professional and the members of the Committee of Creditors to discuss this Resolution Plan, and consider the Committee of Creditor's suggestions, recommendations and modifications with regard to the terms of this Resolution Plan and the financial proposal set out herein. We look forward to working with Resolution Professional and the Committee of Creditors to negotiate and finalise a resolution plan that ensures a successful insolvency resolution process in respect of the Company and delivers maximum value for the Financial Creditors and other stakeholders of the Company. In this regard, subject to discussions, the Resolution Applicant would consider matching any competing offer made by any other resolution applicant. 2. In the event that there is any change in Applicable Law after the date of submission of the Resolution Plan, relating to, or otherwise affecting in any manner, the CIRP under the Code or the provisions of this Resolution Plan, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al liability for the Resolution Applicant and / or affects the going concern of the company. 4. In the above circumstances, the Performance Guarantee, deposited by the Resolution Applicant with the Resolution Professional shall stand revoked and be released unconditionally, without any deduction, to the Resolution Applicant. 7. Assignment by Creditors: If at any time before the NCLT Approval Date, any creditor transfers/assigns its loans/debts to any other person or third party, such assignee/ transferee shall be bound by the terms of this Resolution Plan. 8. Severability: In the event it is determined that any provisions of the Resolution Plan is unenforceable either on its face or as applied to any claims or transaction and/or in the event any provision of the Resolution Plan becomes invalid for reasons other than by breach of any party, the Resolution Applicant may apply to the NCLT for appropriate modification of such provisions of the Resolution Plan, and such invalidity and/or unenforceability of the provision of the Resolution Plan shall not render the whole Resolution Plan ineffective, unless otherwise directed by the NCLT 9. Modification: No amendment or modi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Approved Resolution Plan and the NCLT Approval Order with third parties, including Governmental Authorities. 4. Standstill: From the time the Resolution Plan is approved by the Committee of Creditors upto and including Closing Date, the Company the Resolution Professional and the Committee of Creditors shall not, without consulting with the Resolution Applicant, take any action or decision which contravenes the provisions of this Resolution Plan." 8. The Resolution Plan, as reproduced above is discussed, however, certain concessions as demanded cannot be granted in toto at this moment because of either uncertainty/contingency or due to lack of corroborative evidence. Reliefs and concessions in respect of licenses, goodwill, permits etc. are required to be used and availed by the incoming management hence liberty is granted to take appropriate action for the transfer in the name of the incoming entity. About the outstanding tax demand the same is to be dealt with as per the respective provisions of law, however, subject to the provisions of the Insolvency Code. 9. The Procedure as prescribed under The Code is that a Resolution Plan is required to be submitted by a Reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an analytical 'satisfaction' is a condition precedent before granting of approval. 10. To sum up the above discussion, the Resolution Plan as approved by the Committee of Creditors is by and large hereby sanctioned by this Order in view of the recent judgment of the apex court in K Sashidhar& Indian Overseas Bank & ors.[Civil Appeal No. 10673/2018], Date of order: 05.02.2019. The Hon'ble Supreme Court in the said order has made the role of COC quite vital for deciding the fate of the company. It has been held that the Adjudicating authority is not required to go into the merits or reasoning of the decision taken by the COC for approval or rejection of a resolution plan. The only benchmark which is set up to be determined by the AA is to see whether the plan has been approved by 75% voting of the COC or not. Therefore, the commercial wisdom is not allowed to be interfered with. The relevant portion of the said judgment is reproduced herein below: "As aforesaid, upon receipt of a "rejected" resolution plan the adjudicating authority (NCLT) is not expected to do anything more; but is obligated to initiate liquidation process under Section 33(1) of the I&B Code. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olvency Code, therefore, the Resolution Plan has to be approved. The Resolution Applicant has submitted an affidavit as required U/s 30(1) of the Code stating that he is eligible U/s 29A of the Code. 12. Regarding the exemptions sought, Government liabilities and statutory dues, it is worth to observe that the same should be restricted to those Government liabilities which are ascertained and crystallised as on the date when the CIRP commenced. Further, on commencement of CIRP, due to pronouncement of moratorium if any tax is levied, the same can be considered for waiver as held in the decision of NCLT, Chandigarh Bench, in the case of "State Bank of India V. MOR Farms Pvt. Ltd." dated 15.06.2018 in CA No.s 71/2018 & 171/2018 in CP(IB)- 51/Chd/Hry/2017 wherein waiver is granted in respect of tax dues. 13. The Resolution Plan is binding on the Corporate Debtor and other stakeholders involved so that revival of the Debtor Company shall come into force with immediate effect and the "Moratorium" imposed under section 14 shall cease to have any effect henceforth. The Resolution Professional shall submit the records collected during the commencement of the Proceedings to the Insolvency ..... X X X X Extracts X X X X X X X X Extracts X X X X
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