Beacon Trusteeship Limited vs Modella Textile Industries Limited

O R D E R

“RESOLVED THAT pursuant to Section 30(4) of Insolvency and Bankruptcy Code, 2016 read with Regulation 39 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and in accordance with any other provisions, rules and regulations made thereunder, approval of the members of the Committee of Creditors of Modella Textile Industries Limited be and is hereby accorded to the Resolution Plan received on December 23, 2022 read with addendum to the resolution plan received on May 10, 2023 submitted by Ashar Group for Modella Textile Industries Limited.

RESOLVED FURTHER THAT the Committee of Creditors hereby approves the distribution as stipulated in resolution plan submitted by Ashar Group for Modella Textile Industries Limited.

RESOLVED FURTHER THAT the Resolution Professional of Modella Textile Industries Limited be and is hereby authorized to take such steps as may be necessary in relation to the above, if required and to settle all matters arising out of and incidental thereto and sign and execute all documents and writings that may be required and generally to do all acts, deeds, make payments and things that may be necessary, proper, expedient or incidental for the purpose of giving effect to the aforesaid resolution including filing necessary applications with the Hon’ble NCLT for the same.”

4. Resolution Plan for the Corporate Debtor:

4.1 Summary of the Financial Proposal

#Secured Financial Creditors:

Tranche I: Payment of upfront amount of ₹125,00,00,000/- within a period of 60 days from the Effective Date.

Tranche II: As on the Effective Date, the claims of EARC (as per the List Creditor of dated May 03, 2023) shall be converted into an Interest free loan which shall be secured by creation of first ranking and exclusive charge by way of mortgage on 1,45,000 sq. ft. RERA Carpet Area and exclusive usable area. The terms of repayment of the said loan shall be as follows:

i.

Fixed payment of ₹2,75,50,00,000/- (at ₹19,000 per sq. ft. RERA Carpet Area realizable market rate *1,45,000 sq. ft) to EARC over a period of 5 years by way of repayment of loan secured by first ranking and exclusive charge by way of mortgage on 1,45,000 sq. ft. RERA Carpet Area and exclusive usable area.

ii.

In case of higher realization above ₹19,000/- per sq. ft. RERA Carpet Area realizable market rate up to a maximum increase of ₹3,000/- per sq. ft, the amount realized for sale up to ₹22,000/- per sq. ft. RERA Carpet Area realizable market rate shall be paid to EARC.

iii.

All realization above ₹22,000/- per sq. ft. RERA Carpet Area realizable market rate shall be for the benefit of Resolution Applicant and shall be a passthrough amount to the Resolution Applicant and EARC would not have any vested rights over these benefits.

iv.

Tranche I and Tranche II shall be collectively referred to as "Secured Creditor Settlement Amount". EARC and the RA / Borrower shall be permitted to mutually agree to amend, at any time, the Terms for repayment of Loan as mentioned in Annexure A.1 of the Resolution Plan.

4.1.1 CIRP Cost:

iii.

All costs, expenditure incurred/to be incurred by the RP towards the CIRP of the Corporate Debtor (“CoC Costs”) shall be fully borne by the RA.

4.1.2

The dissenting Financial Creditors (i.e. those Financial Creditors who voted against or abstained from voting for the Resolution Plan approved by the CoC), as per section 30(2) of the Code, are being paid an amount not less than an amount to be paid to them in accordance with Sec 53(1) in the event of Liquidation of the Corporate Debtor.

4.1.3

Payments to the Operational Creditors (Including Statutory Dues) and to Workmen and Employees have been given in priority of payment over financial creditors in terms of Regulation 38(1) of the CIRP Regulations.

4.1.4

The Operational Creditors have been paid an amount which is not less than the amount to be paid to such creditors in the event of liquidation of the corporate debtor under section 53 or the amount payable to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53 of the Code, whichever is higher.

4.1.5

The shares held by the existing shareholders of the Company shall be extinguished. In the estimate of the Resolution Applicant, the Liquidation Value that would be payable to the shareholders, would also be NIL. Accordingly, the existing shareholders, whether equity or preference, shall not be paid any amount for the transfer, cancellation or reduction of their share capital and any claims in relation thereto shall stand extinguished without any payment or recourse.

4.1.6

The Resolution Applicant has submitted that once the payments set aside in the Resolution Plan have been paid in full in terms of the said Plan -

i.

all claims, debts and dues of the Creditors pertaining or related to the period prior to the CIRP commencement date shall stand satisfied and extinguished, and no such existing claim, debt or due shall subsist against the Corporate Debtor and the Resolution Applicant by any Creditor(s) unless such Claims are specifically admitted by the Resolution Professional or covered under the CIRP Cost. It is also submitted that in the event any Claim of the Operational Creditors is not submitted to the Resolution Professional prior to the approval of the Resolution Plan by the NCLT or such claim is rejected by the Resolution Professional or such Claim raised subsequently, however, pertains or related to period prior to the approval of the Resolution Plan by the NCLT, such Creditors will not be entitled to receive payments, if any, under the Resolution Plan with respect to such claims.

ii.

All the litigations/ proceedings by the creditors, whether in relation to admitted claims or not (whether present or future litigations) against the Company for the period prior to the takeover of the control and management of the Company by the Resolution Applicant, shall stand quashed and the Corporate Debtor shall no longer be required to make any payments and have no liabilities in relation to such litigations/ proceedings.

4.2 Effective Date

The Effective Date of the Resolution Plan shall be the date when the Resolution Plan is approved by this Tribunal.

4.3 Term of Resolution Plan

The Resolution Plan is valid for a term of Five years till all the payments are made to all the stakeholders as per the terms and conditions of the Resolution Plan. The obligations of the Resolution Applicant to implement the Resolution Plan shall become effective only from the Effective Date. The Resolution Plan shall become binding on the Corporate Debtor and its employees, members, creditors, guarantors, Central Government, any State Government(s), any local authority and other stakeholders involved in the Resolution Plan on the Effective Date.

4.4

The Resolution Applicant has sought various reliefs and concessions as set out in the Resolution Plan.

4.5

The Applicant has submitted that the Resolution Plan, submitted by Ashan Properties Private Limited, approved with 88.95% voting of the members of the Committee of Creditors, has been examined and the Resolution Plan:

a. provides for payment of Insolvency Resolution Process Costs in a manner specified by the board in priority to the payment of other debts of Corporate Debtor;

b. provides for payment of the debts of the Operational Creditors in such manner as specified by Regulation 38(1) of the IBBI (Insolvency Resolution Process for Corporate Persons Regulations) 2016;

c. provides for management of the affairs of the Corporate Debtor after the approval of the Resolution Plan; and

d. does not contravene any of the provisions of the law for the time being in force.

5.

The Applicant/Resolution Professional further submits that -

5.1

He has filed three Appeals before the Hon’ble NCLAT bearing CA AT(INS) No.610, 709 and 710 of 2023 against the order dated 23.01.2023 of this Bench in IA-2647, 2640 and 2624 of 2022 in CP(IB)-68(MB)/2021 in which this Bench allowed the claim filed by Grover family (Nikhil Grover and Kusum Grover in IA-2647/2022, Uday Grover, Rohit Ravinder Grover and Madhu Ravinder Grover in IA-2640/2022 and Vinod Grover in IA-2624/2022, as Financial Creditors and directed them to be treated as part of CoC. The Hon’ble NCLAT has listed the above three Appeals for final disposal on 20.07.2023. Therefore, the status of the Grover family as Financial Creditor of Corporate Debtor is under challenge and active consideration of the Hon’ble NCLAT.

5.2

There are other five Interlocutory Applications filed in this CP which are pending for adjudication:

1.

IA-3268/2022 filed on 08.10.2022 by Uday Grover u/s 65 & 60(5) of the IBC, seeking direction to the RP to admit the claim of the Applicant as Financial Creditor in the category of Homebuyers. Also, to look into the inflated claim of other Fin. Creditor allegedly admitted by the RP.

2.

IA-3859/2022 filed on 19.12.2022 by RP u/s 60(5) seeking direction to allow the RP to utilize the funds (Rs. 2,28,45,000/-) transferred from the RERA account into the Union Bank of India to run the present CIRP. This IA is filed against Edelweiss & RERA.

3.

IA-2028/2023 filed on 12.05.2023 by RP against TMC us 60(5) seeking direction to restrain the TMC from acquiring the asset of the CD.

4.

IA-1444/2023 filed on 12.04.2023 by RP against suspended board of directors u/s 19(2) seeking cooperation from the Respondent-1.

5.

IA-1074/2023 filed on 17.03.2023 by RP against suspended board of directors u/s 43 of the Code seeking direction to the respondents to make payment of Rs. 3,21,70,651/-.

5.2

The Resolution Plan is not subject to any contingency and is filed before the expiry of the period of CIRP provided in Section 12 of the Code, as this Bench had granted an extension in the CIRP period vide its order dated 30.03.2023 in IA-1173/2023 extending the period up to 29.05.2023.

5.3

The Applicant has filed application along with Form ‘H’ prescribed under Regulation 39(4) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and has appended a tabular summary of Applicant's determination of compliance of the Resolution Plan with various provisions and regulations under the Code and CIRP Regulations.

“95.

(i) Once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of the resolution plan shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan;

(ii)

2019 Amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which the Code has come into effect;

(iii)

consequently, all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval under Section 31 could be continued.”