Export Import Bank of India vs M/s. Majestic Research Services and Solutions Ltd.

I.A.(Plan) No.07/2024 is approved, vide separate order. File be sent to records.

This Application is filed by CA Vineeta Maheshwari (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 13.02.2024 submitted by Mrs. Rashmikaben Patel in consortium with M/s Seazone Granito Private Limited (hereinafter referred to as 'Successful Resolution Applicant/ SRA'), approved by the CoC in its 11th meeting, held on 04.04.2024, with 94.93% voting share.

M/s. Majestic Research Services and Solutions Limited, Corporate Debtor was admitted into CIRP vide order dated 25.05.2023 in CP (IB) No. 78/BB/2022, wherein Vineeta Maheshwari (IBBI/IPA-001/IPP00185/2017-2018/10364) was appointed as the Interim Resolution Professional. The Authorized Share Capital of the Respondent/Corporate Debtor is Rs.15,00,00,000 and Paid-up Capital is Rs.10,02,60,000.

The key dates and events during the Corporate Insolvency Resolution Process period are tabulated as hereunder:

i. Following Registered Valuers were appointed for Land and Building on 10.07.2023- - Swapna Kulkarni - Dhiraj Jaiswal (expressed unwillingness to carry out the valuation of assets of the CD, therefore another valuer appointed on 11.10.2023). - Akshar Gandhi

ii. Following Registered Valuers were appointed for Securities and Financial assets on 10.07.2023: - Prasad Kulkarni (expressed unwillingness to carry out the valuation of assets of the CD, therefore another valuer appointed on 29.09.2023). - Amardeep Kaur - Hajarilal Saini

iii. Following Registered Valuers were appointed for Plant & Machinery on 10.07.2023: - Ruchita Bhonge - Yashwant Kumar Sharma

The Fair Value and Liquidation value of the Corporate Debtor is as follows:

The Successful Resolution Applicant, Mrs. Rashmikaben Patel in consortium with M/s Seazone Granito Private Limited, have submitted resolution plan on the basis of consortium agreement dated 12.08.2023. Ms. Rashmikaben Patel's core area of expertise is in ceramic tiles whereas M/s Seazone Granito Private Limited is a Private Limited Company incorporated on 23.09.2010, with CIN No. U26933GJ2010PTC062398. The SRA assures to have a robust banking relationship with major Indian Banks, reflecting its stellar reputation and creditworthiness. Its diversified asset portfolio, timely repayments and profitable revenue streams further solidify its credit profile. This strong foundation enables advantageous terms, faster approvals and underscores its financial stability for growth endeavours.

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 A12. Further, the due diligence report under Regulation 36A (8) has been submitted by the RP, Annexure 05 to the memo dated 02.09.2024, confirming the eligibility of the SRA.

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

b. Payment Schedule:

c. Implementation, Supervision & Management of the Corporate Debtor:

A Monitoring Committee will be formed immediately after the Appointed Date. The committee shall consist of the erstwhile RP, one representative of the CoC, and one representative of SRA, to monitor and supervise the implementation of the Plan. The term of the Plan is 60 days, and the payment of the full and final amount of the total consideration proposed shall be made in the order of priority indicated in the Code and provided in the Plan. Further, for effective implementation of the Plan Schedule 3 and 4 of the Plan list out implementation actions and their timeline.

d. Source of Fund and Feasibility of the Plan:

The SRA is affirmative on its ability to fund acquisition costs internally, with the option to seek financing from financial institutions/NBFCs/relatives/friends. Up to 100% of the Resolution Plan amount to be infused within 60 days, either as equity or unsecured loans from various sources including directors/shareholders, friends & relatives, group companies, and financial institutions/NBFCs. Affidavits by the SRA, proposed shareholders and lenders have been filed along with the bank statement of each, showing the required bank balance for payment as per the Resolution Plan. Further, Mrs. Rashmikaben Patel has a net worth of 22.54 Crore as on 31st March 2024. M/s Seazone Granito Private Limited has filed its audited report for 2023-24 and has a net worth of 1.58 Crore as on 30th September 2024.

e. Performance Bank Guarantee, Avoidance Transactions, Pending Litigation & IBBI fee:

The Resolution Professional has stated that on 20.04.2024, the SRA issued the Performance Bank Guarantee by transferring Rs. 1 Crore to the CIRP accounts in accordance with the terms under RFRP. Affidavit confirming the same is marked as Annexure-02 to memo dated 15.01.2025 along with the payment advice for the same.

Additionally, vide Compliance Memo dated 28.11.2024 diary no. 6727, the RP has filed affidavits stating there are no avoidable transactions or pending litigations against the CD and that Regulatory fee to be paid to IBBI as per Regulation 31A, is included in the CIRP costs as per clause 4.1.1.5 of the Resolution Plan (Pg. 71).

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

On 24.07.2024, the Adjudicating Authority the following order was given: "...On perusal of the Resolution Plan, it is noticed that the following documents are not filed:

On 15.10.2024, the Adjudicating Authority had given the following order: "...On perusal of the Resolution Plan, it is noticed that the following documents have to be filed:

On 17.02.2025, the Adjudicating Authority had given the following order "...The Ld. Counsel for the Applicant is directed to file revised Form-H within two weeks..."

In compliance, the Applicant has filed affidavits dated 02.09.2024, 28.10.2024, 28.11.2024, and 10.03.2025.

Post commencement of CIRP, CoC was constituted by the RP. The details of the creditors, the distribution of voting share among them and the position of voting for the Resolution Plan is as under (Para 5 of Form H):

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 fresh Form H, of which Para 7 is produced below:

#Amount provided overtime under the Resolution Plan and includes estimated value of non-cash components. It is not NPV.]

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:

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 given in Para no. 09 of the revised Form-H (supra). The same 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.1,00,000/- to the claims of the CD within 30 days reckoned from the appointed date.

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 stipulates the payment of the CIRP costs at actuals, prioritized in accordance with Section 30(1)(a) of the Code and that the total actual CIRP cost incurred till date is amounting to Rs. 22,34,863/-. (Breakup of CIRP Costs as on 22.04.2024 is annexed herewith and marked as Annexure A13). - Secured Financial Creditor: Axis Bank Ltd and Exim Bank, as the two secured financial creditors, are receiving compensation commensurate with their security interests in the CD's assets. While Axis Bank Ltd receives Rs. 7.25 crores, equivalent to 80.99% of the admitted claim, based on its full charge over the land and building assets, Exim Bank receives Rs. 0.95 crores, representing 31.97% of its claim, reflecting its pledge on the shares owned by the CD. Furthermore, this payment shall be made as Rs.4,13,00,000/- within 30 days, with the balance Rs.4,13,00,000/- to be paid within 60 days from the Appointed Date, proportionate to their admitted claim.

- Unsecured Financial Creditor: Tata Capital Financial Services Ltd, an unsecured financial creditor that has dissented against the plan, is proposed to receive Rs. 5.00 lakhs, which accounts for 8.00% of the admitted claim of Rs. 63,64,237/-. This payment is accorded priority over other financial creditors and is slated for disbursement within 30 days. It is submitted that Section 30(2)(b) of the Code provides for the payment of debts to financial creditors who do not vote in favor of the resolution plan. Such payment shall be made in a manner as specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with Section 53(1) in the event of the liquidation of the CD. This clause is being adhered to in the Plan. Dissenting financial creditors are being paid more than the liquidation value and are being paid in priority to secured financial creditors.

- Operational Creditors (Govt Dues & Others): The Plan proposes to pay 1 lakh (0.64% of the admitted claim) to the operational creditors and this amount shall be paid within 30 days from Appointed Date.

Regulation 38(1B): As mandated under Regulation 38(1B) of the CIRP Regulations, the Resolution Applicant confirms in Clause 3.2 of Section A that as on date the Resolution Applicant or any of its related parties has not failed to implement or contributed to the failure of implementation of any Resolution Plan approved under the code.

Regulation 38(3)(a): The Resolution Applicant sense that severe liquidity stress, financial mismanagement, and significantly high level of unsustainable debt for the Corporate Debtor 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 to all the mandatory requirements of the Code and CIRP Regulations, deals with the interest of all stakeholders, provides for payment to all the stakeholders in line with the Code, provides for the management and control of the Corporate Debtor, term and implementation schedule. The Resolution Plan Executing agency through support of experts as well as technically capable persons in the industry, who will assist for the projected revival of the Corporate Debtor. The experience that the Resolution Applicant brings in the industry together with its revival strategy for the Corporate Debtor as per the terms contained in the resolution plan, make this Resolution Plan feasible and viable. The SRA has also submitted a Business Plan for the CD at Pg. 17 of the Resolution Plan.

Regulation 38(3)(c): Schedule 3 of the Plan highlights the Implementation Actions and Schedule 4 lays emphasis on the release of the Security Interests.

Regulation 38(3)(d): Subject to the satisfaction of the other provisions of the Resolution Plan, the mechanism for the approvals required for implementation of the Resolution Plan is set forth in Schedule-3(Implementation Actions) and Schedule - 4 (Release of Security Interest). The implementation schedule for the plan is produced below, for reference:

Regulation 38(3)(e): Clause 3.5.5 of Section A of the Plan emphasis the capability of the SRA to implement the Resolution Plan. Additionally, SRA is affirmative on the ability to fund acquisition costs internally, with the option to seek financing from financial institutions/NBFCs/relatives/friends. In this regard, SRA has filed the bank statements of the proposed shareholders and lenders along with the Net worth of the SRA; (Mrs. Rashmikaben Patel has a net worth of 22.54 Crore as on 31^st March 2024. M/s Seazone Granito Private Limited has filed its audited report for 2023-24 and has a net worth of 1.58 Crore as on 30^th September 2024).

In the circumstances and for the aforesaid reasons, the incumbent application bearing I.A. No. 07 of 2024 in CP (IB) 78/2022 is allowed and accordingly:

a. The moratorium imposed vide order dated 25.05.2023 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.