Samarth Lifters Private Limited vs DBM Geotechnics & Construction Private Limited

A) CORPORATE INSOLVENCY RESOLUTION PROCESS COSTS:

B) PAYMENT TO WORKMEN

C) PAYMENT TO FINANCIAL CREDITORS:

Claims of Financial Creditors

Schedule of payments to Financial Creditors

D) PAYMENT TO EMPLOYEES (NOT CLASSIFIED AS WORKMEN)

E) PAYMENT TO OPERATIONAL CREDITORS

F) PAYMENT TO STATUTORY DUES AS ON 09.01.2020:

v.

The Applicant has submitted that the total claim received as Statutory dues Excluding liabilities towards the Employees is Rs. 21,17,14,944/- (Rupees Twenty One Crores Seventeen Lakhs Nine Hundred Forty Four only) where as Exclusive liability towards the Employees are Rs. 1,53,09,913/- (Rupees One Crore Fifty Three Lakhs Nine Thousand Nine Hundred Thirteen only) was verified and admitted by the Applicant towards the claim of Statutory Dues. The revised proposal from the Resolution Professional is as follows:

Revised proposal from the Resolution Professional
DBM Geotechnics & Constructions Pvt. Ltd.
Outstanding Statutory Dues as on 09.01.2020
Sr. No.	Description of Statutory Claims	Claims Received (Rs.)	Liability as per Books of Accounts (Rs.)	Exclusive liability towards the Employees (Rs.)
1	ESIC Payable (B/s)	24,92,142	21,12,440
2	GST Payable (BS)
2A	Maharashtra State’s Claims
	July 2017 to March 2018	67,31,593	67,31,593
	April 2018 to March 2019	99,11,138	99,11,138
	September’ 2019	21,67,167	22,29,108
	October’ 2019	10,32,898	10,02,773
	November’ 2019	29,23,961	6,43,640
	December’ 2019	31,66,752	19,10,465
2B	Gujarat State’s Claims	21,45,639	4,64,089
2C	Other State’s Claims		61,46,418
4	Provident Fund Payable (B/s)		58,50,966	58,50,966
5	TDS Payable (B/s)		1,82,54,432
6	VAT Payable (B/s)	13,78,62,182	1,48,80,080
	1) Appeal Order Period 2010-11, Assessment Order 2012-13, 2013-14 and 2014-15 and Demand Notice for the respective period. 2) Form GST-ASMT-13 for the month of August 2019 and Demand Notice-DRC-07
7	Income Tax Payable FY: 09-10		3,07,330
8	Professional Tax Payable (Employees)		2,43,906	2,43,906
9	Tax Collected at Source Payable		3,532
10	Service Tax Payable (B/s)		1,85,69,760
11	Gratuity		92,15,041	92,15,041
12	Sub Total	16,84,33,472	9,84,77,431	1,53,09,913
13	Statutory dues as per books of accounts for which claims have not received, namely, Sr. No. 2C, 4, 5, 7, 8, 9, 10 and 11.		5,85,91,385
14	Total statutory dues now proposed to be considered = Dues for which claims are received + Dues as per books of accounts for which claims are not are received	22,70,24,857
15	Statutory dues excluding the Exclusive liability towards the Employees	21,17,14,944
16	Exclusive liability towards the Employees			1,53,09,913
17	Applicable percentage of haircut applied for determining the proposed payment to Financial Creditors as per the Financial Plan	90.37%
18	Proposed payment towards the Statutory Dues excluding the Exclusive liability towards the Employees. It is proposed to pay this amount in 4 (four) annual instalments.	2,03,88,149
19	Applicable percentage of haircut to be applied to the Exclusive liability towards the Employees as per the order dated 21.10.2022 by the Hon’ble NCLAT.			0.00%
20	Proposed payment towards Exclusive liability towards the Employees. It is proposed to pay this amount upfront.			1,53,09,913
21	Proposed additional payment towards the Statutory Dues including exclusive liability towards the Employees			3,59,98,062

G) ORDER OF PRIORITY OF PAYMENT

i.

The Applicant submits that the Resolution Plan is prepared with the presumption that the payments towards the liabilities shall be made in the priority as envisaged under the provisions of Section 30 read with Section 53 of IBC and other such relevant applicable laws.

H) TRANSACTION STRUCTURE

a. Current Share Capital and Shareholding Pattern

i.

As per the provisional Financial Statements as of FY January 09, 2020, the Company has an authorized share capital of Rs. 50 Crores divided into Rs. 5 Crores Equity shares of Rs. 10 each.

ii.

As on January 09, 2020, the Company has an issued, subscribed and paid-up share capital of Rs. 32,77,53,900 Crores (Thirty-Two Crores Seventy-Seven Lakh Fifty-Three Thousand and Nine Hundred Rupees Only) divided into. 3,27,75,390 (Three Crores Twenty-Seven Lakh Seventy-Five Thousand Three Hundred and Ninety) Equity shares of Rs. 10 each.

b. Reduction of Share Capital

i.

As the net worth of Corporate Debtor is already negative, Resolution Applicant proposes to cancel all shares allotted to existing shareholder, equivalent amount shall be transferred to capital reserves. No Amount shall be payable towards the extinguishment of all the equity shared of such existing shareholders.

ii.

The Resolution Applicant proposes to infuse the funds by way of Equity Share Capital and debt. Accordingly, existing authorized share capital of the Corporate Debtor shall be increased, if necessary.

iii.

The Corporate Debtor shall not be required to make any separate application before the Tribunal under the provisions of the IBC and that the approval of this Resolution Plan by the Tribunal shall be treated as if the necessary approvals required to have been obtained under the Companies Act, including consent of shareholders or creditors of the Corporate Debtor and applications to any other appropriate authority, as required under the Companies Act, together with the process laid down under the Companies Act, have been obtained and duly complied with.

iv.

No future approval of the Tribunal will be required to give effect to the Capital Reduction under the Companies Act and there shall be no requirement to add “and reduced“ in name of the Corporate Debtor as the approval of the Resolution Plan by’ the Tribunal shall be deemed to be an order under Section 66 of the Companies Act along with other applicable provisions of the Companies Act, sanctioning and approving the Capital Reduction and all matters hereto.

v.

The Capital Reduction will be approved and implemented pursuant to the provisions of the IBC specifically Regulation 37 of the CIRP Regulations read with Section 31 of the IBC. The Compliance with the provisions of the Resolution Plan and the Capital reduction shall be deemed to be in accordance with and constitute compliance with any and all provisions of Applicable Law that would have otherwise applied to a similar reduction of capital under the Companies Act, the Income Tax Act 1961 and/ or under rules/ circulars/ regulations issued thereunder.

vi.

The Resolution Applicant upon the approval of the Resolution Plan shall infuse an amount of Rs. 14.90 crores (Rupees Fourteen Crores Ninety Lakhs Only), of which Rs. 4.70 crores would be classified as equity capital and balance amount in the form of debt towards repayment of balance outstanding to Financial Creditors and towards working capital. Accordingly, the Resolution Applicant shall be allotted 47,00,000 equity shares of Rs.10/- each.

vii.

The Resolution Applicant upon the approval of the Resolution Plan shall be granted full control of the assets and the management of the Corporate Debtor, under the supervision of the Resolution Professional. Further, the proposed infusion along with the existing bank balances and future accruals (on account of whatsoever reason) an amount of Rs. 30.00 crores (Rupees Thirty Crores Only) shall be utilised for the repayment of the existing debts of the Corporate Debtor as well as funding the future working capital requirements of the Corporate Debtor.

viii.

The indicative shareholding pattern post the Reduction of existing capital and issue of fresh equity shares to the Resolution Applicant, shall be as follows:

Sr. No.	Category of Shareholder	No. of Shares	% Holding
1	Next Orbit Ventures Fund	47,00,000	100%
	Total	47,00,000	100%

I) DISBURSEMENT OF AMOUNT SHALL BE CARIED OUT IN ACCORDANCE WITH AND IN THE ORDER OF PRIORITY

SET OUT IN THE TABLE BELOW:

(Amount in Crores)

Sr. No.	Stakeholder	Claim Received (as per IM)	Total Payment (in Crores)	Haircut (%)	Upfront Payment (in Crores)	Balance Payment (in Crores)
A	Fees & Costs Payable to Resolution Professional
	CIRP Costs	All outstanding as on the date of AA Order will be paid in priority	All outstanding as on the date of AA Order will be paid in priority	NIL	All outstanding as on the date of AA Order will be paid in priority	All outstanding as on the date of AA Order will be paid in priority
B	Financial Creditors
1.	Banks/ FIs/Body Corporates	280.37	27.00	90.37%	19.76	Balance Rs. 7.24 crores shall be paid in instalments as stated in Note 1 to this table.
C	Operational Creditors
1.	Workmen & Employees (not considered	6.88	0.04	99.99%	0.04	Nil
2.	Statutory Authorities and Other Operational Creditors	84.75	0.00	100.00%	0.00	Nil
3.	Statutory Authorities	22.70	3.56	90.37%	1.53	2.03
	TOTAL	385.78	30.60		21.33	9.27

Note 1: Balance Rs. 7.24 crores shall be paid in instalments as follows:

- 1st Instalment: Rs. 1.81 crores shall be paid by the Resolution applicant at the end of 1(one) year from the date of passing of Order by the AA accepting this Resolution Plan; and

- 2nd Instalment: Rs. 1.81 crores shall be paid by the Resolution applicant at the end of 2(two) years from the date of passing of Order by the AA accepting this Resolution Plan.

- 3rd Instalment: Rs. 1.81 crores shall be paid by the Resolution applicant at the end of 3(three) years from the date of passing of Order by the AA accepting this Resolution Plan.

- 4th Instalment: Rs. 1.81 crores shall be paid by the Resolution applicant at the end of 4(four) years from the date of passing of Order by the AA accepting this Resolution Plan.

Balance Rs. 2.96 Crores (Rupees Two Crores Ninety Six Lakhs Only) towards working capital will be brought in by the Resolution Applicant time to time on need basis.

10. MANAGEMENT OF COMPANY AFTER RESOLUTION

i.

On and from Effective Date, the Resolution Applicant shall take over the management control of the Corporate Debtor, including its business activities. While the implementation of the Resolution Plan and settlement of the creditors shall happen in parallel, the Resolution Applicant shall take over the board and management of the Company as of the Effective Date.

ii.

The erstwhile promoters will neither be in control nor continue as promoters in the Corporate Debtor with effective from the Effective Date. Appropriate filings will be made of erstwhile promoters as promoters of the Company, and classification of the Resolution Applicant as the new promoter of the Corporate Debtor.

iii.

The Resolution Applicant shall appoint new directors on the Board of the Company on the Effective Date so as to constitute the Board in compliance with applicable provisions of Companies Act, 2013. The newly appointed Board shall take up the responsibilities of the day to day affairs of the Company and manage it in its regular course. The new Board will be professionally managed by experienced persons. The whole-time key managerial personnel will be appointed as per the requirements of the Companies Act, 2013.

iv.

The Resolution Applicant shall appoint the statutory and internal auditor of their choice, subject to applicable laws and regulations. The existing statutory and internal auditors of the Corporate Debtor shall resign from the Corporate Debtor.

v.

Extension of Resolution Professional’s role as the monitoring agency from the Effective Date till the completion of payments to the Creditors and Implementation of the Resolution Plan shall be at such mutually agreed commercial terms between the Resolution Professional and the Resolution Applicant.

vi.

From the approval date and until the transfer date, an Independent monitoring committee, consisting of RP, 1 (one) representatives from COC and 1 (one) representative from Resolution Applicant, shall be appointed for Corporate Debtor. The Monitoring committee shall supervise the implementation of the Resolution Plan, and shall be required and entitled to do all the acts, deeds, matter and things as may be necessary, desirable or expedient in order to implements and give effect to this Resolution Plan, and shall act under supervision of NCLT. The monitoring committee shall have the same functions, powers and protections as assigned to Resolution Professional under the IBC. Until the transfer date, the COC shall continue with its roles and responsibilities, and have protections, as set out in the IBC. All the decisions of the monitoring committee shall be taken by the unanimous consent of the members of monitoring agency. Members of monitoring committee can be the employees of Resolution Applicant. Monitoring committee will arrange meetings on time to time basis with notice in advance to understand current stage of implementation of resolution plan and future course of action with respect to resolution plan. The fees and other cost relating to monitoring committee and meetings arranged by monitoring committee will be incurred and paid out of the cash flows of the Corporate Debtor.

vii.

The RA intends to seek assistance of suitable persons from the presently associated team of the Company so as to assist the RA in better understanding of the business operations of the Company and ensure an effective and clear transitioning to complete ongoing contracts.

viii.

The Resolution Applicant proposes to continue using the current corporate office for administrative purpose on mutually agreed terms & conditions with the owner of the office premises.

ix.

All intellectual property rights, including but not limiting to, trademark and copyrights shall remain with the Corporate Debtor and no further action would be required by the Resolution Applicant for the same.

Existing Employees During CIRP Period

i.

The Resolution Applicant appreciates the fact that the Corporate Debtor currently employs over 330 people including Casual Staff. Livelihood of many people is directly or indirectly dependent on the successful operations of the manufacturing and processing units of the Corporate Debtor. The Resolution Applicant will endeavour to largely retain the existing employees however efficiencies and cost controls are also important for sustainability of the Corporate Debtor and the Resolution Applicant may accordingly rationalize the employee strength, if necessary.

11. IMPLEMENTATION AND SUPERVISION:-

i. Term of the Plan

a. In the terms of Section 31 (1) of the IBC, this Resolution Plan shall become binding on the Corporate Debtor and its employees, members, creditors, guarantors and other stakeholders including the Tax Authorities, Stamp Duty Authorities and other Government Authority involved in this Resolution Plan on the date of which this Resolution Plan is approved by the NCLT.

b. For the effective implementation of Resolution Plan and management of the corporate debtor, the authorized share capital of the corporate debtor will stand increased to such extent as may be required to enable restructuring of the paid-up share capital of the corporate debtor. The said increase shall take effect by virtue of the sanction of Resolution Plan.

c. The effectiveness and implementation of the Resolution Plan shall be subject to and conditional on the fulfillment of the Conditions Precedent and grant of reliefs & concessions as set out in this Resolution Plan. It is clarified that if all the conditions precedent and all the reliefs and concessions as set out in this resolution plan are not fulfilled and /or granted then the Resolution Plan shall be deemed not approved by the NCLT. Further, the approved Resolution Plan shall remain valid unless rejected by the NCLAT or any Higher Court having the jurisdiction to reject the said Resolution Plan.

d. Without prejudice to the foregoing, the obligations of the Resolution Applicant to implement the Resolution Plan shall become effective from the Effective Date. If the conditions / approvals required for the Resolution Plan are not fulfilled / obtained to the satisfaction of the Resolution Applicant, then this Resolution Plan and the obligations of the Resolution Applicant under this Resolution Plan shall terminate without requiring any further actions on the part of the Resolution Applicant. In such case, no Person shall have a right to institute any proceedings, legal or otherwise or make any claims against the Resolution Applicant, and the Resolution Applicant or any member of its organization shall not be liable for any damages, costs or claims by any and all stakeholders and / or any governmental authority.

e. Unless the Resolution Plan terminates on account of non-completion of conditions precedent / receipt of approvals, in all other cases, even if the term of the Resolution Plan stands terminated, the order of the Adjudicating Authority and the terms of the Resolution Plan in so far as they relate to the rights of the Resolution Applicant and the settlement of liabilities and claims of the Corporate Debtor as per the Resolution Plan is concerned, shall remain in force at all times.

ii. Approvals Required for The Plan and Compliance with Law

a. The Resolution Plan of the Applicant shall be required to be approved by the Committee of Creditors, and thereafter, by the Adjudicating Authority under Section 31of the IBC.

b. The Resolution Applicant will cause amendment of the constitutional documents of the Corporate Debtor as may be necessary to give effect to the transactions contemplated in this Resolution Plan. No additional approval would be required for this alteration once the approval from Adjudicating Authority is obtained.

c. Competition Act 2002: The Resolution Plan does not have any anti-competitive covenants and does not support any abuse of dominant position. Further, considering the turnover and assets size of the Company (as per latest available audited financials of the Company), no approval is required under the Competition Act, 2002, for the actions contemplated in this Resolution Plan.

iii. Indicative Timeline for Implementation

INDICATIVE ACTIVITY SCHEDULE
S. No.	Activity	Timeline (days)
Phase I - Approval Process
1	Approval of Resolution Plan by the Committee of Creditors	Prior to T
2	Application to Adjudicating Authority	Prior to T
3	Approval of Resolution Plan by Adjudicating Authority and receipt of Adjudicating Authority Order and all other approvals as per the extant laws as prescribed under the	T
Phase II - Implementation of Resolution PlanResolution Plan (Effective Date)
1	Effective Date	T
2	Increase in Authorized Share Capital of the Company and Reduction of Share Capital of the Company	T+5
3	Funding Infusion of Rs. 4,11,00,000/- Crores and allotment of 41,10,000 Equity Shares to Resolution	T+10
4	ApplicantTake-over of the management and control by the Resolution Applicant	T+17
5	Reconstitution of Board, Appointment of CEO and other key employees, appointment of Auditors.	T+17
Phase III - Settlement/ Deal Closure of Creditors / Achievement of Completion
Date1	Payment of CIRP Cost	T + 25
2	Payment to Banks/ FIs and Workmen/Employees/ Outstanding Statutory Dues	T + 30

The above schedule is only an estimate and the actual time of completion of approvals from authorities and regulators may be different. The implementation timelines indicated above may accordingly change and this Resolution Plan will be implemented in accordance with such approvals and changed timelines. The Resolution Applicant confirms that the 'Effective Date' shall be the later date of either - (a) the date of receipt of the order of the Adjudicating Authority approving the resolution plan; Or (b) as the case may be the date of receipt of last such applicable orders/approvals as per the extant laws as prescribed under the Resolution plan. The RA undertakes to take all requisite steps to obtain all other approvals immediately after the NCLT approval is achieved.

12.

The Resolution Applicant is eligible to submit resolution plan. The Successful Resolution Applicant confirm that they and their connected persons are not disqualified under Section 29A of the Insolvency & Bankruptcy Code, 2016.

13. OBSERVATIONS AND FINDINGS:-

i.

As per IBC Code 30(2)(a) – A Resolution Plan provides for the payment of insolvency resolution process costs in a manner specified by the Board in priority to the payment of other debts of the corporate debtor.

ii.

As per Section 30(2)(b), the Respondent has agreed to pay operational creditors an amount which shall not be less than liquidation value or the amount that would have been paid to such creditors if the amount to be distributed under the Resolution Plan is distributed in accordance with priority under Section 53(1), whichever is higher.

iii.

Provides for the management of the affairs of the Corporate Debtor after approval of the Resolution Plan. Section 30(2)(c).

iv.

Provides for a term of the plan, implementation schedule and supervision of the Resolution Plan under Section 30 (2) (d)& Regulation 38(2)(c).

v.

The Resolution Applicant proposes to appoint suitably qualified and experienced persons, key personnel and other officer for operations of the Corporate Debtor.

vi.

The Resolution Plan does not contravene any of the provisions of the law for the time being in force - please include a statement to this effect in the Resolution Plan as per Section 30(2)(e).

vii.

The Resolution Applicant has given a declaration that the Resolution Plan does not contravene any provisions of the law for the time being in force as per Section 30(2)(f).

viii.

As per IBBI Guidelines 38(1)(b) - The amount payable under a Resolution Plan -to the financial creditors, who have a right to vote under sub-section (2) of section 21 and did not vote in favour of the Resolution Plan, shall be paid in priority over financial creditors who voted in favour of the plan.

ix.

The resolution applicant or any of its related parties has not failed to implement or contributed to the failure of implementation of any other resolution plan approved by the Adjudicating Authority at any time in the past.

x.

The Resolution Plan is in compliance of the Regulation 38 of the Regulations in terms of Section 30(2)(f) as under:

a. The amount due to the operational creditors under a resolution plan shall be given priority in payment over financial creditors. Regulation 38(1).

b. The Resolution Plan has all the adequate means of supervising of the implementation of the Plan as required under Regulation 38(2) (c), of the IBBI, Insolvency resolution process for corporate persons, Regulation 2016.

c. Provides for the payment of CIRP Costs in priority to the repayment of any other debts of the Company (Regulation 38(1)(a)).

d. Provides for the manner of implementation and supervision of the Resolution Plan and adequate means for implementation and supervision of the Resolution Plan.

e. The amount payable under a resolution plan to the Financial Creditors, who have right to vote under sub-section (2) of section 21 and did not vote in favor of the resolution plan, shall be paid in priority over financial creditors who voted in favour of the plan.

f. The Resolution Applicant confirms that to the best of the knowledge of the Resolution Applicant, the Resolution Plan is not in contravention of the provisions of Applicable Law and is in compliance with the Code and the CIRP Regulations.

g. The Resolution Applicant confirms that the Resolution Applicant and its connected persons are not disqualified from submitting a resolution plan under Section 29A of the Code and other provisions of the Code and any other Applicable Law.

h. Provides for the management and control of the business of the Corporate Debtor during its term.

i.

All the above factors demonstrate that the plan address the cause of default and the Resolution Applicant has the capacity to implement the Resolution Plan.

j. That the Resolution Applicant or any of its related parties has never failed to implement or contributed to the failure of implementation of any other Resolution Plan approved by the Adjudicating Authority at any time in the past. This is in compliance of Regulation 38(1)(b) of the Regulations.

k. The interests of all stakeholders (including Financial Creditors, Operational Creditors and other creditors, guarantors, members, employees and other stakeholders of the Company, keeping in view the objectives of the Code (Regulation 38(1A)).

“Para 42- Thus, it is clear that the limited judicial review available, which can in no circumstance trespass upon a business decision of the majority of the Committee of Creditors, has to be within the four corners of section 30(2) of the Code, insofar as the Adjudicating Authority is concerned, and section 32 read with section 61(3) of the Code, insofar as the Appellate Tribunal is concerned, the parameters of such review having been clearly laid down in K. Sashidhar (supra).”

ORDER

“on the date of approval of the Resolution Plan by the Adjudicating Authority, all such claims, which are not a part of 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.”

“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.”