A N SrinivasaRajeUrs vs M/s. Shreyas Papers Pvt. Ltd & Anr.

Heard the Ld. Counsel for RP.

I.A (Plan) No.13 of 2024 is approved by separate order.

File be sent to records.

This Application is filed by Mr. Syam Prabhad (hereinafter referred to as ‘Applicant/Resolution Professional’) under Section 30(6) read with Section 31 of the Insolvency and Bankruptcy Code, 2016 and Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 read with Rule 11 of the National Company Law Tribunal Rules, 2016 seeking approval of the Resolution Plan dated 19.09.2024 submitted by Mr. Umarparook Allasa Bagawan (hereinafter referred to as ‘Successful Resolution Applicant/ SRA’), approved by the CoC in its 10^th meeting, held on 05.10.2024, with 100% voting share.

M/s. Shreyas Papers Private Limited and Shreenidhi Papers Private Limited, Corporate Debtors were admitted into CIRP vide order dated 31.10.2023 in CP (IB) No. 5/BB/2022 and vide order dated 09.06.2023 in CP (IB) No. 118/BB/2022, wherein Mr. Narayana Kamma and Mr. Girish Kambadaraya were appointed as the Interim Resolution Professionals respectively. The key dates and events during the Corporate Insolvency Resolution Process period are tabulated as hereunder:

APPOINTMENT OF REGISTERED VALUERS:

 Motappa Thimmarayaswamy  Sheshanarayana Gundurao

 S Lakshman  D V Murali Manohar

 Koteswara Rao Gutta  Sneha Sravanthi The Fair Value and Liquidation value of Shreyas Papers Private Limited is as follows:-

The Fair Value and Liquidation value of Shreenidhi Papers Private Limited is as follows:-

The Successful Resolution Applicant, Mr. Umarparook Allasa Bagawan gained sufficient on-field experience and insights into the workings and management of paper industry. The SRA has also held several managerial positions in Mumbai and has overseen the production processes and team management activities. Since the SRA was involved in the industry of paper manufacturing, the SRA’s expertise is tailor-made to the requirements of the two Corporate Debtors, which too were involved in the manufacturing of paper and allied products.

The Resolution Applicant meets the criteria provided by the CoC and is also eligible under Section 29A of the Code, affidavit regarding the same is filed as Annexure A in the Memo filed by applicant in compliance with the order dated 04.02.2025 vide Diary No. 1389. Further, the due diligence report under Regulation 36A (8) has been submitted by the RP, annexed as Annexure N, confirming the eligibility of the SRA.

a. Pay-out to Stakeholders as proposed in the Plan:

Sl. Category of Creditor Amount Amount Amount No. Claimed Admitted Proposed 1. CIRP Costs - 30,00,000 2. Financial Creditors 9,94,39,930 9,94,39,930 8,00,00,000 3. a. Workmen & Employee 3,99,51,034 3,99,51,034 86,00,000 b. Government 3,97,56,007 c. Others 16,28,20,598 3,97,56,007 8,00,000 12,83,24,832 26,00,000 4. Other Debts & Dues - -TOTAL 34,19,67,569 12,83,24,832 9,50,00,000/-

b. Payment Schedule: Upon approval of the Plan, 10 % of amount payable to stakeholders; Within 30 days or upon handing over of the factory, 40% of amount payable to stakeholders; Within 90 Days, 50% of amount payable to stakeholders.

c. Implementation, Supervision & Management of the Corporate Debtor: A Monitoring Committee shall consist of the erstwhile RP, one representative of the CoC, and one representative appointed by the Financial Creditors in the COC will be constituted without any further action required from the Corporate Debtor or the Resolution Applicant, to monitor and supervise the implementation of the Plan. The committee shall be functional from the Approval date till the date on which entire plan is implemented or 24 months whichever is earlier. Monitoring Committee shall be in place till the entire charge is paid and satisfied.

d. Source of Fund and Feasibility of the Plan: The RA proposes to raise funds by way of Equity/Deposits/Unsecured loan from within the group and the relatives/friends/family members/associates of the directors and promoters of the group companies and also from the fresh bank borrowing. The summary of means of finance for resolution plan is as under:

Heard learned counsel for the Resolution Professional and carefully perused the pleadings on record.

On 04.02.2025, the Adjudicating Authority the following order was given:

In compliance to the order dated 04.02.2025 memo has been filed and affidavit in respect of the pending litigation was filed vide Diary No. 1389. The same is taken on record.

On 08.04.2025, the Adjudicating Authority had given the following order:

On 16.06.2025, the Adjudicating Authority had given the following order:

In compliance, the Applicant has filed affidavits dated 15.04.2025 and 25.06.2025.

The details of the creditors, the distribution of voting share among them and the position of voting for the Resolution Plan is as under:

Sl. Name of Creditor Voting Share (%) Voting for Resolution Plan (Voted for/ Dissented/ Abstained) 1. KDCC Bank 100% Voted for Total 100.00%

The details of stakeholders and the amounts provided for them under the Resolution Plan is given in Para 7 of Form H. However, it is to be noted that in compliance to the order dt. 17.02.2025 of this Authority, the RP has filed a filed a fresh Form H, of which Para 7 is produced below:

(Amount in Rs. Lakhs)

Sl. Category of Sub-Category of Amount Claimed Amount Admitted Amount Amount No. Stakeholder Stakeholder (In Rs.) (In Rs.) Provided Provided under the to the Plan # Amount (In Rs.) Claimed (%) 1 Secured (a) Creditors not - - - -Financial having a right to vote Creditors under sub- section (2) of section 21. (b) Other than (a) above: (i) who did not vote in - - - -favour of the Resolution Plan (ii) who voted in favour of the 994.39 994.39 800.00 80.45% Resolution Plan. Total 994.39 994.39 800.00 80.45% 2 Unsecured (a) Creditors not - - - -Financial having a right to vote Creditors under sub- section (2) of Section 21. (b) Other than (a) above: (i) who did not vote in - - - -favour of the Resolution Plan (ii) who voted in favour of the Resolution Plan. Total[(a) + (b)] - - - -3 Operational (a) Related Party of - - - -Creditors Corporate Debtor (b) Other than (a) above: (i)Government 397.56 397.56 8.00 2.01% (ii)Workmen & Employees 399.51 399.51 86.00 21.53% (iii)Operational Creditors (not 1628.21 1283.24 26.00 1.60% included in i & ii) Total[(a) + (b)] 2425.28 2080.31 120.00 4.95 4 Other Debts - - - - -and Dues GRAND TOTAL 3419.67 3074.70 920.00 26.90

The interest of existing shareholders has been altered by Resolution Plan as under, as per Para 8 of Form H:

The compliance of the Resolution Plan as per Para 9 of Form H is hereunder:

Regulation 38 Whether the amount due to the operational creditors Page 17 (clause 5.3) Yes (1) under the resolution plan has been given priority in payment over financial creditors? Regulation Whether the resolution plan includes a statement as Page 12 Yes 38(1A) to how it has dealt with the interests of all stakeholders? Regulation Whether the Resolution Plan provides: 38(2) (a) The term of the plan and its implementation Page 31 (clause 5.7.24) Yes schedule? (b) For the management and control of the business Page 34 (clause 5.8) Yes of the Corporate Debtor during its term? (c) Adequate means for supervising its Page 35 (clause 5.10) Yes implementation? Regulation Whether the resolution plan demonstrates that-38(3) (a) it addresses the cause of default? Page 40 & 42 Yes (b) it is feasible and viable? Page 40 & 42 Yes (c) it has provisions for its effective Page 31 (clause 5.7.24 & Yes implementation? 5.7.25) (d) it has provisions for approvals required and the Page 40 Yes timeline for the same? (e) the resolution applicant has the capability to Page 12 & 40 Yes implement the resolution plan? Regulation Whether the RP has filed applications in respect of NA NA 39(2) transactions observed, found or determined by her? Regulation 39(4) Provide details of performance security received, as Bank Guarantee attached Yes referred to in sub-regulation (4A) of regulation 36B.

At this juncture it is necessary to refer to Section 30(2). The provisions of Section 30(2) of the I&B Code, 2016 are as follows:

The compliance of Section 30(2) of the Code is being further examined as under:

Regulation 38(1): As per Regulation 38(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 the amount due to the operational creditors under the Resolution Plan has been given priority in payment over financial creditors. It is stated that the Resolution Applicant undertakes to pay Rs.26,00,000/- to the claims of the CD within 30 days of NCLT’s approval.

Regulation 38(1A): It is submitted that the Resolution Applicant has considered the interest of all the stakeholders and accordingly has proposed to make payment in the following manner to the stakeholders.

 CIRP Costs: It is submitted that the resolution plan allocates ₹30 lakhs for CIRP costs, to be paid within 30 days of approval. Any excess will be funded by the Resolution Applicant; any shortfall retained by the Corporate Debtor. The Applicant is liable only for CIRP costs.

 Sole Secured Financial Creditor: The Kanara District Central Co-operative Bank Ltd, being the sole Secured Financial Creditor was allotted with Rs. 8,00,00,000 as the proposed payment where the claims admitted was Rs. 9,94,39,930.

 Operational Creditors (Govt Dues & Others): The Plan proposes to pay 26,00,000 lakhs to the operational creditors and this amount shall be paid within 30 days from NCLT’s approval.

Regulation 38(3)(a): The Resolution Applicant sense that there was a slowdown in the paper industry which affected the Corporate Debtors and Higher production costs due to higher interest payments led to defaults due to which the Corporate Debtor was unable to fulfil the obligations towards the banks, and all the other creditors on a timely basis. However, the Resolution Applicant is confident enough that such stress can be averted under its control and management.

Regulation 38(3)(b): The resolution plan confirms that the plan is feasible and viable and funds will be managed by the Resolution applicant for the future business of the Corporate Debtors.

Regulation 38(3)(c): Clause 5.7.24 and 5.7.25 of the Resolution Plan highlights the Implementation Actions.

Regulation 38(3)(d): Subject to the satisfaction of the other provisions of the Resolution Plan, the Resolution applicant ensures to take care of all necessary approval required for implementation of Binding Resolution Plan, within the time period as specified by the law.

Regulation 38(3)(e): The Confirmation and Declaration Clause of the Plan emphasis the capability of the SRA to implement the Resolution Plan.

In the circumstances and for the aforesaid reasons, the incumbent application bearing I.A. No. 13 of 2024 in CP (IB) 5/2022 is allowed and accordingly:

a. The moratorium imposed in the main CP shall cease to have effect from the date of this order.

b. The resolution professional shall forward all records relating to the conduct of the CIRP and the Resolution Plan to the Board to be recorded/ uploaded on its database.