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Judgment
Per : Rajeswara Rao Vittanala, Member (J)
I.A No.116/2019 in C.P(IB) No.63/BB/2017 is filed Anand Ramachandra Bhat, IRP, U/R 11 of the NCLT Rules, 2016 R/w Section 30(6) and Section 31 of the IBC, 2016, by inter alia seeking to approve the Resolution Plan dated 06.06.2018, submitted by Mrs.Juie Hilal for the Corporate Debtor of which was duly approved by the CoC of the Corporate Debtor under Section 30(4) of the I&BC, 2016 and for its implementation etc.
Brief facts of the case, as stated in the application and main Company Petition, which are relevant to the issue in question, are as follows:
C.P(IB) No.63/BB/2017 is filed by M/s.Olive Lifesciences Private Limited U/10 of Code, R/w Rule 7 of I&B(AAA) Rules, 2016, by inter alia seeking to initiate CIRP, impose moratorium etc. Accordingly, the case was admitted on 22.09.2017, by initiating CIRP in respect of Corporate Debtor imposing moratorium, appointing IRP Mr.Gigi Joseph K J as the Interim Resolution Professional and instituted moratorium. By its order dated 15.12.2017, the Adjudicating Authority, appointed Anand Ramachandra Bhat, as RP consequent to decision of CoC in the first meeting held on 21.10.2017. The CIRP period was extended by another 90 days by the Adjudicating Authority on 21.03.2018. The resolution plan dated 06.06.2018 submitted by resolution applicant Mrs.Juie Hilal was unanimously accepted by the CoC on 09.06.2018 pursuant to which the Resolution Professional submitted a report to this Hon'ble Tribunal on 12.06.2018 vide order dated 19.06.2018, this Adjudicating Authority had reserved the orders.
M/s.Sabinsa Corporation New Jersey Corporation has filed a W.P No.52857 of 2017 (GM-RES) before the Hon'ble High Court of Karnataka, by questioning the admission order dated 22.09.2017 passed by this Tribunal. Initially granted stay of the proceedings and ultimately, the said Writ Petition was disposed of by an order dated 31.01.2019, by inter alia observing that the Petitioner make take recourse to such remedy as may be available to him under the law after the moratorium period is over. Therefore, there is some delay in disposal of this Petition.
It is stated that, 1st Meeting of CoC was held on 21.10.2017 and the CoC had proposed to replace the IRP with Applicant herein as Resolution Professional. In furtherance of the resolution passed by the CoC at their 1st Meeting an application was moved by CoC under Section 22 seeking appointment as Resolution Professional to replace IRP. This Hon'ble Adjudicating Authority, vide its order dated 24.11.2017 and 15.12.2017 appointed Applicant as Resolution Professional after consultation with IBBI. Subsequently, the applicant took over the charge and conducted the proceedings under the IBC law and related regulations.
It is stated that the 2nd meeting of CoC, it was resolved that a newspaper advertisement be published inviting resolution plans in respect of the Corporate Applicant and that the resolution plan shall be in compliant with the requirement of IBC.
It is stated that the Applicant has issued invitation resolution plans on 25.01.2018 and published the same in the newspapers. Last date for submission of resolution plan was 26.02.2018 and applicant has received four resolution plans for consideration.
It is stated that the 3rd Meeting of CoC, the CoC had resolved to seek further extension of time by another 90 days for completing CIRP. Accordingly, an application was made to this Adjudicating Authority seeking extension by another 90 days. This Adjudicating Authority was pleased to extend the CIRP period by another 90 days on 21.03.2018 in IA No.69/2018 of CP(IB) No.63/BB/2017. Therefore, the 270 days CIRP was 18.06.2018.
It is stated that the CoC Meetings held from time to time, revival of the Company by way of resolution was discussed and the resolution plan submitted by Mrs. Juie Hilal was considered by the CoC since other resolution applicants did not participate or opted out. The resolution plan submitted by Mrs. Juie Hilal was in accordance with the requirement of IBC and CIRP regulations and hence it was considered by CoC. The Resolution Applicant modified the resolution plan from time to time based on the discussion with the members of CoC.
It is stated that, in the 8th CoC meeting held on 28.05.2018, the CoC had rejected the resolution plan dated 05.06.2017 submitted by the Resolution Applicant Mrs.Juie Hilal.
It is stated that, on 04.06.2018, the resolution applicant Mrs.Juie Hilal, wrote an e-mail to Resolution Professional and Members of CoC for considering a revised resolution plan with a view to resolve the Insolvency situation and in the interest of all the stakeholders and to avoid liquidation situation. An appeal was made to the members of the CoC for convening a meeting. A joint application was made by resolution applicant and CoC to this Adjudicating Authority on 07.06.2018 seeking a direction to the RP to hold the meeting of CoC of consider revised resolution plan of the Resolution applicant, submitted a resolution plan dated 06.06.2018.
It is stated that, this Adjudicating Authority on 08.06.2018 directed the applicant to conduct the CoC meeting on or before 10.06.2018 and to submit report by 13.06.2018. Accordingly, as per the direction of the Adjudicating Authority, the 9th CoC meeting held on 09.06.2018
It is stated that, in the 9th CoC meeting held on 09.06.2018, the CoC deliberated the resolution plan dated 06.06.2018 and unanimously approved the resolution plan. In the said meeting, all the members of CoC were present and voted in favour of the resolution plan after modifying certain terms of the resolution plan with the consent of the resolution applicant which are duly noted in the minutes of the meeting. Therefore, the resolution plan dated 06.06.2018 and the modifications made by the CoC as evidenced in the minutes of the meeting constitutes the approved resolution plan by CoC.
Heard Shri DhyanChinnappa, learned Senior Counsel for Resolution Applicant and Shri Anand.R.Bhat, Resolution Professional with his counsel Shri Dharma Tej. We have carefully perused the pleading of both the parties and extant provision of the Code and relevant law as relied upon by the parties.
The Learned Resolution professional has produced the minutes of 9th meeting of CoC of Olive Lifesciences Private Limited, held at 81, 8th Main, 8th Cross, Serpentine Road, Kumara Park West, Bangalore - 560020, on Saturday 9th June, 2018 At 4:30 PM wherein the proposed Resolution plan originally submitted on 28th May, 2018 which was subsequently modified as on 07th June, 2018 filed by Mrs.Juie Hilal and also filed Compliance Certificate in Form-H, Under Regulation 39(1) of the IBBI(Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
As detailed supra, the learned Resolution Professional has conducted CIRP in question, strictly in accordance with provisions Code and has taken steps for maximization of assets and to see that Corporate Debtor is a going concern rather than to send it for liquidation.
The Learned Resolution professional has also filed Compliance Certificate in Form-H, Under Regulation 39(4) of IBBI (IRP for Corporate Persons) Regulations 2016, by inter alia stating as follows :
He has certified that :
The said Resolution Plan complies with all the provisions of the I&BC 2016 (Code), the IBBI Regulations, 2016 (CIRP Regulations) prevailing at the time of approval of resolution plan by CoC and does not contravene any of the provisions of the law for the time being in force.
The Resolution Applicant Mrs.Juie Hilal has submitted an affidavit pursuant to section 30(1) of the Code confirming its eligibility under Section 29A of the Code to submit the Resolution Plan. The contents of the said affidavit are in order.
c)The said resolution plan has been approved by the CoC in accordance with the provisions of the Code and the CIRP Regulations made thereunder. The Resolution Plan has been approved by 100% of voting share of financial creditors after considering its feasibility and viability and other requirements specified by the CIRP Regulations. The voting was held in the meeting of the CoC on 09th June, 2018 where all the members of the CoC were present.
d)The list of financial creditors of the Corporate Debtor, Olive Lifesciences Pvt. Ltd, being members of the CoC and distribution of voting share among them is as under:
SL No. Name of Creditor Voting Share (%) Voting for Resolution Plan (Voted for/dissented/Abstained) 1. HDFC Bank Ltd 61.47 Voted For the Resolution Plan 2. Axis Bank Ltd 31.87 Voted for the Resolution Plan 3. ECGC Ltd 0.12 Voted for the Resolution Plan 4. Abhay Suraksha Builders Pvt. Ltd 3.32 Voted for the Resolution plan 5. Abhay Solvent Pvt. Ltd 3.22 Voted for the Resolution Plan e)The Resolution plan includes a statement under Regulations 38(1A) of the CIRP Regulations as to how it has dealt with the interests of all stakeholders in compliance with the Code and regulations made thereunder.
f)The amounts provided for the stakeholders under the Resolution Plan is as under:
SL No. Category of Stakeholder Amount claimed Amount admitted Amount provided under the Plan Amount provided to the amount claimed 1. Dissenting Secured Financial Creditors NA NA NA NA 2. Other secured Financial Creditors 4,434.56 4,434.56 3,970.5 89.54 3. Dissenting Unsecured Financial Creditors NA NA NA NA 4. Other unsecured Financial Creditors 316.5 316.5 52.3 16.52 5. Operational Creditors 1,470.79 1,386.25 85.50 05.81 Government 7.94 7.94 19.10 240 Workmen NIL NIL NIL NA Employees NIL NIL 33.50 NA ... 6. Other Debts and Due 3.00 Total 6,229.79 6,145.25 4,163.30 Note :This does not include CIRP Costs
g)The interests of existing shareholders have been altered by the Resolution Plan as under:
SL No. Category of Shareholder No. of Shares held before CIRP No. of shares held after the CIRP Voting share (%) held before CIRP Voting Share (%) held after CIRP 1. Equity * 49,50,100 1,00,00,000 100% 100% 2. Preference 25,00,000 NIL NIL NIL Series A 3. Preference - Series B 4,00,000 NIL NIL NIL Note : the resolution plan envisages cancellation of existing equity and preference share capital and fresh equity shares amounting to Rs.1 Cr. to be held by resolution applicant and their nominees.
h) Section 8.1 Supervision of the plan:
"The newly appointed board shall have the responsibility of effective implementation of the proposed plan. The actions necessary for independent supervision of plan are as follows:
Agency to monitor implementation of the plan
On approval of Resolution Plan by NCLT, Resolution Applicant proposes to appoint monitoring agency comprising of 3 members as below:
1.Insolvency Professional, Shri Anand Ramachandra Bhat.
2.One representative of Secured Financial Creditors
3.One representative of Resolution Applicant.
The monitoring agency shall have the following responsibilities:
- Possession of Assets will vest with monitoring agency till such time the entire agreed dues are paid to the secured financial Creditors. - To supervise implementation of resolution plan as approved by NCLT, by new management of the Company. - To provide regular updates to the lenders. - To provide undated, if any, to IBBI as and when required. - To ensure disbursement of dues to financial and operational Creditors as per the approved plan. All the responsibility for the smooth implementation of the Resolution plan. - Extent full co-operational in implementation of Resolution plan.
i)Section 8.4 for the Resolution Plan deals with the supportive that the plan and moratorium agency was also proposed Section 8.4 which reads as under:
i.The Resolution Applicant fulfils the criteria prescribed under section 29A of the I&BC (Amendment), 2017 and Regulation 38(3) of the IBBI, (Insolvency Resolution Process for Corporate Persons), Regulations, 2016.
ii.The Proposals provides for the payment of the cost of CIRP and fee payable to the IRP/RP in terms of Regulation 38(1) (a) of the IBBI (Insolvency Resolution Process for Corporate Persons), Regulations, 2016.
iii.The Resolution Plan complies with the guidelines in Regulations 39 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
iv.There is no liquidation process involved, the Corporate Debtor will be back on track and would function as a going concern.
v.Resolution Plan for Olive Lifesciences Pvt. Ltd by Mrs.JuieHilal.
vi.No internal accruals are considered for the CIRP, however, in case shortfall the same shall be made good by infusion of funds from existing businesses operations of Resolution Applicant as all the obligations are met with fresh infusion of funds.
vii.The debt would be paid in a time bound manner, and the Corporate Debtor Company is being taken over acquisition of share of the Corporate Debtor.
j)Section 11.1 Conclusion, which reads as under:
- The Resolution Plan envisages a settlement package for all the stakeholders. - Induction of fresh funds by the Resolution Applicant to finance the cost of the revival. - The Resolution Plan includes measures covered by Regulation 37, of CIRP Regulations, - The mandatory requirements, under Regulation 38 are also satisfied. - Then the Company shall deliver the maximum possible economic value to all stakeholders including secured and unsecured financial creditors, operational Creditor including workmen, statutory dues as against the Liquidation Value. - The resolution Plan would enable restoration and/or generation of employment to about 200 persons and also preach the livelihood of many families. It would, as well, reinforce the positive trends in socio-economic development Mysore and Bangalore region. - Revival of IFL would also contribute to exchequer by way of GST and other Taxes like property tax and ion income generation to Income Tax. It may also contribute to earnings of foreign exchange with export of its products.
By perusal various documents/Balance sheets/Audit report filed by the Resolution Applicant prima facie establish that the Resolution Applicant is financially competent enough to be Resolution Applicant to carry out terms and conditions of the Resolution Plan in question. The Resolution plan is approved by the COC with 100% in accordance with law. Therefore, we are of the considered opinion that the resolution Plan is a fit to be approved under Section 31(1) of the IBC, 2016.
In the result, by exercising the powers U/s 31(1) IBC, 2016, I.A No. 116 of 2019 & C.P.(IB)No.63/BB/2017 are disposed of with the following directions:
It is hereby approved the Resolution Plan dated 6th June, 2018 submitted by Mrs.Juic Hilal for the Corporate Debtor as approved by the CoC by e- voting held on 9th June, 2018 with 100% of voting share Crores by declaring that the Resolution Plan will be binding on the Corporate Debtor and its employees, members, creditors, guarantors, and other stakeholders involved in the resolution plan.
The moratorium imposed vide order dated 15.12.2017 passed in the CP shall cease to have affect from the date of communication of the order.
The Resolution Professional is directed to handover the management control all the assets, documents/records in physical and/ or digital form on an as is where is basis to the Resolution Applicant immediately, and the Resolution Professional will ceased to be resolution professional.
The Resolution Professional shall forward all records relating to the conduct of the CIRP and the resolution plan to the Board to be recorded on its database.
The Resolution Applicant shall pursuant to the resolution plan approved under sub-section (1) obtain the necessary approval required under any law for the time being in force within a period of the one year from the date of approval of the resolution plan by the Adjudicating Authority under sub-section (1) or within such period as provided for in such law, whichever is later:
Provided that where the resolution plan contains a provision for combination as referred to in section 5 of the Competition Act, 2002 (12 of 2003), the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of Creditors.
The Resolution Applicant is at liberty to file any miscellaneous application seeking for clarification, if any, in the implementation of the terms and conditions to the Resolution Plan.
No order as to costs.