CA Francis Mathew vs Reena Paul & Ors.

These Applications arose from the Insolvency resolution process of Personal Guarantors of Unitek Power Solutions India Ltd., the Corporate Debtor, since the facts and points are similar to all the applications all the applications have been taken together and common order is passed.

These applications have been filed by CA Francis Mathew., the Resolution Professional of Mrs. Reena Paul, Mr. Mathew John, Mr. K G Paul, Mr. John Zachariah, and Mrs. Annu Mathew, Personal Guarantors to Unitek Power Solutions India Ltd. seeking an order of this Adjudicating Authority to take on record the meeting of committee of creditors(COC) under section 112 of IBC, and to reject the repayment plan as per the report of the resolution professional under section 114 of IBC, and pass order declaring that creditors are entitled to proceed with bankruptcy.

The insolvency resolution process against Mrs. Reena Paul, Mr. Mathew John, Mr. K G Paul, Mr. John Zachariah, and Mrs. Annu Mathew, Personal Guarantors to Unitek Power Solutions India Ltd was initiated by way of an application under section 95 of IBC, 2016 by the J M Financials Assets Reconstruction Company Limited.

These applications were admitted by this Adjudicating Authority by an order dated 17.03.2022.

A public announcement intimating the commencement of the insolvency resolution process against Mrs. Reena Paul, Mr. Mathew John, Mr. K G Paul, Mr. John Zachariah, and Mrs. Annu Mathew was made on 31.03.2022, and inviting claims from creditors. Only the Financial creditor (FC) who initiated the IRP submitted the claim and is the sole creditor.

RP states that all the PG’s were asked to submit the repayment plan. All personal guarantors submitted the repayment plan under section 105 of the Code by 07.11.2022. RP prepared the statement of affairs, and thereafter, the report of the resolution professional under section 106 of the IBC on the repayment plan of Mrs. Reena Paul, Mr. Mathew John, Mr. K G Paul, Mr. John Zachariah, and Mrs. Annu Mathew, personal guarantors were filed, they were taken on record by this Tribunal on 16.11.2022.

A meeting of the creditors was held on 21.11.2022 to consider the repayment plan submitted by the personal guarantors proposing a settlement of Rs.21 crore however this base repayment plan was not accepted by the FC for settlement offer of at least 25 crores and 10% upfront cash and balance settlement within 60 days. The RP intimated to PG’s who sought time till 29.11.2022, and thereafter on 01.12.2022, an offer of 24 crore was made by the PGs through Mr. John Zachariah. The COC discussed the same on 02.12.2022 and agreed the offer subject to certain conditions such as minimum 10% upfront settlement, the consent of all PG’s authorising Mr. John Zachariah, NOC and undertaking of all PGs to settle the amount, consent of property owners to sell the property under lien with FC, necessary compliances under law and the proof of source of funds of third-party buyer. These conditions were intimated to PG’s who sought further time. Subsequently on 19.12.2022, COC met for taking a final decision wherein it was decided to seek extension of 30 days for submission of modified repayment plan from this Tribunal which was granted on 05.01.2023. It is stated by RP that despite several reminders and time being given, PG’s could not come up with a modified repayment plan with the conditions specified. Accordingly at final meeting of COC dated 18.01.2023, the FC by 100% vote decided to reject the base repayment plan submitted by the PG’s and direct RP to file report under section 112 for orders.

The report of the RP under section 112 IBC is filed as part of these applications. The Tribunal has perused the reports of the resolution professional under section 112 and observed that the repayment plan submitted by the Mrs. Reena Paul, Mr. Mathew John, Mr. K G Paul, Mr. John Zachariah, and Mrs. Annu Mathew, PGs has not received the approval of creditors holding more than three-fourths value as required under section 111.

Heard submissions and perused documents on record. Section 114(1) of the IBC, 2016 states as follows:

In view of the above facts, the repayment plan submitted by the personal guarantors under section 105 stands rejected in line with the report of the resolution professional under section 112.

The moratorium declared under section 101 shall cease to have effect from the date of this order.

In consequence of the rejection of the repayment plan under section 114, the debtors and the creditor are entitled to file an application for bankruptcy under Chapter IV of the Code under Part III.

These Applications are therefore, Allowed and disposed of.

The Registry is hereby directed to forward the copy of this order to the IBBI as provided under Section 115(3) of IBC, 2016 and send e-mail copies of the order forthwith to all the parties and their counsel for information and for taking necessary steps.

Let the certified copy of the order be issued upon compliance with requisite formalities.

File be consigned to records.