11th March, 2024 Approval of Resolution Plan - Privilege Industries Limited [Interlocutory Application No. 4004 of 2023 in Company Petition 1330-(IB)-V- 2020] (615.63 KB)
BEFORE THE ADJUDICATING AUTHORITY
HON’BLE NATIONAL COMPANY LAW TRIBUNAL
AT MUMBAI BENCH
INTERLOCUTORY APPLICATION NO. 4004 OF 2023
IN
COMPANY PETITION 1330/(IB)-MB-V/2020
In the matter of an
Application under
Section 30(6) read with
Section 31 of the Insolvency
and Bankruptcy Code, 2016
I.A. 4004 OF 2023
Sripatham Venkatasubramanian
Ramkumar
Resolution Professional for
Privilege Industries Limited
…Resolution Professional /
Applicant
In the Matter of
Unity Small Finance
Bank Limited
..Financial
Creditor/Petitioner Versus Privilege Industries Limited
...Corporate
Debtor
IN THE NATIONAL COMPANY LAW TRIBUNAL, MUMBAI BENCH, COURT-V IA No. 4004 of 2023 IN C.P. No. 1330/I&B/MB/2020
2
Order Dated: 23.02.2024
Coram Hon’ble Reeta Kohli, Member (Judicial) Hon’ble Madhu Sinha, Member (Technical)
Appearance For the Resolution Professional: Adv. Jash Shah (PH)
ORDER
Per: Reeta Kohli, Hon’ble Member (Judicial) 1. The present Application is being filed on behalf of the Resolution Professional (“Applicant”) of Privilege Industries Limited (“Corporate Debtor”) under Section 31 of the Insolvency and Bankruptcy Code, 2016 (“Code”) for seeking approval of the Resolution Plan (as amended) dated August 8, 2023, submitted by SNJ Breweries Private Limited (“Successful Resolution Applicant”) and thereby concluding the corporate insolvency resolution process (“CIRP”) of the Corporate Debtor.
This Hon’ble Tribunal admitted the Corporate Debtor into corporate insolvency resolution process (“CIRP”) as per the Insolvency and Bankruptcy Code, 2016 (“Code”) vide Order dated February 15, 2023 (“Admission Order”). Vide the Admission Order, Mr. Devendra Prasad was appointed as the Interim Resolution Professional (“IRP”) of the Corporate Debtor.
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Subsequent to the Admission Order, the erstwhile IRP issued a Public Announcement and thereafter collated the claims and constituted the Committee of Creditors (“CoC”) of the Corporate Debtor on March 14, 2023, which as on date comprises of Omkara Asset Reconstruction Company Private Limited and Unity Small Finance Bank Limited.
Further, the first meeting of the Committee of Creditors (“CoC”) was convened on March 20, 2023, whereby the CoC inter alia resolved to replace Mr. Devendra Prasad with the Applicant as the Resolution Professional of the Corporate Debtor.
Thereafter, the Applicant came to be appointed as the
Resolution Professional (“RP”) of the Corporate Debtor, by
this Hon’ble Tribunal vide Order dated March 31, 2023.
6.
Subsequently, the Applicant has been conducting the CIRP
of the Corporate Debtor and has taken necessary steps for
the same. In this regard, the Applicant has convened the
Second Meeting of the CoC on May 5, 2023, wherein inter
alia it was resolved to issue the FORM G and the eligibility
criteria regarding prospective resolution applicants was
discussed. The CoC also deliberated upon the appointment
of various advisors / professionals, including legal advisors
to the Applicant, registered valuers for the Corporate Debtor
etc.
Accordingly, the Applicant issued the FORM G on May 6, 2023, inviting prospective resolution applicants to submit
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their Expression of Interest (“EoI”). The FORM G, in consultation with the CoC of the Corporate Debtor, has been revised from time to time by issuing corrigendum.
Thereafter, the Applicant convened the Third Meeting of the CoC on May 30, 2023, in which the Applicant and the CoC decided on the request for resolution plan (“RFRP”) and the evaluation matrix for resolution plans of prospective resolution applicants. The Applicant also updated the CoC regarding the EoI received by various prospective resolution applicants.
On June 26, 2023, the Applicant convened the Fourth Meeting of the CoC, wherein the Applicant inter alia provided operational updates to the CoC and also discussed regarding certain potential litigations with the CoC.
Thereafter, the Applicant conducted the Fifth Meeting of the CoC on July 27, 2023, wherein the Applicant and the CoC discussed regarding the operational updates of the Corporate Debtor as well as the appointed of auditor for compliance check of the various prospective resolution applicants as per Section 29A of the Code.
At this stage, it is submitted that there were 9 prospective resolution applicants (“Final PRAs”) which are held to be eligible for submitting resolution plans for the Corporate Debtor. From the Final PRAs, the Applicant had received 6 (six) Resolution Plans for the Corporate Debtor on July 21, 2023, which were opened by the Applicant on July 24, 2023.
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Following were the prospective resolution applicants who appeared in the final list of PRAs and had submitted a resolution plan by July 21, 2023:
Associated Alcohols and Breweries Limited Consortium of Sharda Construction & Corporation Private Limited & Haridra Laxmi Krishival Private Limited Grainotch Industries Limited Nav Durga Fuel Private Limited Som Distilleries & Breweries Limited SNJ Breweries Private Limited
The Applicant and the CoC invited all the Resolution Applicants to present their resolution plans on July 27, 2023, and July 28, 2023, and the resolution applicants were given an opportunity to correct the inconsistencies / non compliances noted and submit the corrected resolution plans with improvement in resolution plan amounts offered by August 2, 2023.
Amongst the resolution plans along with amendments thereto received by August 8, 2023, the three eligible resolution plans submitted by SNJ Breweries Private Limited, Associated Alcohols and Breweries Limited and Grainotch Industries Limited were put by the Applicant to vote before the CoC, from August 9, 2023 to August 23, 2023.
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Subsequent to the voting, the CoC has, with a 79.60% majority, approved the Resolution Plan dated August 2, 2023, of the Successful Resolution Applicant i.e., SNJ Breweries Private Limited (“Approved Resolution Plan”), as per Section 30 (4) of the Code.
The Applicant also submits that the Successful Resolution Applicant is compliant under Section 29A of the Code.
For the ready reference of this Hon’ble Tribunal, the salient features of the Approved Resolution Plan are as follows:
o The Successful Resolution Applicant (SNJ Group) has a major presence in the Alcohol manufacturing industry with its own ENA unit, distilleries (Grain & Molasses), breweries & IMFL units.
o The Successful Resolution Applicant has successfully taken over M/s Empee Distilleries Ltd as a going concern under the Code and has not defaulted in implementation of this resolution plan.
o The Approved Resolution Plan provides for full upfront payment (i.e. all amounts under the Approved Resolution Plan are to be paid within 60 days).
o Successful Resolution Applicant has allowed Financial Creditors to proceed against Personal Guarantors and other Corporate Guarantors and Proceeds from avoidance application shall accrue to CoC.
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o Successful Resolution Applicant has proposed to pass on profits earned during CIRP period and EBITDA generated between the plan approval date by this Hon’ble Tribunal till closing date as an additional consideration to Secured Financial Creditors.
o Successful Resolution Applicant has proposed for liabilities pertaining to operations of Crown Beers India Private Limited (“CBIPL”) to be taken up separately by CBIPL as per provisions of Settlement Agreement dated January 18, 2021.
o The value of payments as envisaged in the Approved Resolution Plan to all stakeholders is INR 383.30 Crores, CIRP Costs payable at actuals, Profits earned during CIRP period & EBITDA Surplus to Secured FCs as additional consideration and these are proposed to be funded from internal accruals of the Successful Resolution Applicant.
o The Successful Resolution Applicant has provided documentation related to their available internal accruals (both bank statements for available funds and unutilized borrowings limits in Successful Resolution Applicant as well as its group companies and Receivables expected to accrue from Government entities who are customers to the Successful Resolution Applicant) to satisfy the members of the CoC on their financial capability to implement the Approved Resolution Plan.
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o Successful Resolution Applicant shall make necessary additional investments and infuse necessary working capital to operationalize, revive and run the business of the Corporate Debtor as a going concern which is estimated to be INR 110 Crores approximately.
o The summary of payouts as envisaged in the Approved Resolution Plan is provided below:
Particulars Pay-out proposed under the Plan
INR Crs. Timeline Source CIRP Costs Actuals 15 Days Successful Resolution Applicant’s own funds OC - Statutory Dues 2.28 15 Days OC – Employees & Workmen & Others
NA Sub-Total (A) 2.28
Secured FC – Upfront – I 37.93 15 Days Successful Resolution Applicant’s own funds Secured FC – Upfront – II 75.86 30 Days Secured FC – Upfront – III 75.86 45 Days Secured FC – Upfront – IV 189.65 60 Days Sub-Total to Secured FC (B) 379.30
Unsecured FC – Upfront – I 1.72 15 Days Successful Resolution Applicant’s own funds Sub-Total to Unsecured FC (C) 1.72
Settlement as per plan (A+B+C=D) 383.30
Cash & Cash equivalents with CD (E) Actuals to Secured FCs Upfront Profits earned during CIRP shall be distributed pro-rata amongst Secured FCs
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EBITDA Surplus between NCLT plan approval date & effective date (F) Actuals to Secured FCs Upfront EBITDA generated between NCLT approval and closing date shall be distributed to Secured FCs Total settlement to various stakeholders (D+E+F=G) INR 383.30 crores + CIRP Costs at actuals & Profits earned during CIRP + EBITDA Surplus as additional consideration to Secured FCs
The implementation schedule as contemplated in the Approved Resolution Plan is set out hereinafter, for the ready reference of this Hon’ble Tribunal:
Sr. No. Activity
Timeline (days)
Part I – Approval Process of the Proposed Plan
1.
Approval
of
plan
by
Committee of Creditors.
X
2.
Application to NCLT for
approval of plan.
X+15
3.
Approval of plan by NCLT.
X+45 or such other
later date when the
Resolution Plan may
be approved by the
Hon’ble
NCLT
(hereinafter referred
to as Y)
Part II – Implementation of Plan & Settlement of
Creditors
4.
Appointment of Monitoring
Agent.
During
Monitoring
period, i.e. between
Y and Y+60
10
Constitution of Monitoring
Committee.
During
Monitoring
period, i.e. between
Y and Y+60
6.
Transfer of all assets of the
Corporate Debtor, including
licenses,
permissions,
grants, etc in favour of the
Corporate Debtor.
Y+15
7.
Extinguishment
of
all
liabilities of the Corporate
Debtor, abatement of all
legal proceedings, etc, i.e.
coming into effect of all the
terms of the Resolution Plan
as enshrined in Clause 3.2
of the Resolution Plan.
Y
8.
Payment of CIRP costs.
Y+15
9.
Payment
to
operational
creditors
including
government creditors.
Y+15 days
10.
Payment of 1st tranche to
financial
creditors,
both
secured and unsecured.
Y+15 days
11.
Issuance of fresh equity
shares to the Resolution
Applicant.
Upon
payment
of
CIRP
costs,
operational creditors
including
government
creditors and the 1st
11
tranche to Secured and unsecured financial creditors 12. Reconstitution of the Board of directors of the corporate debtor. Upon payment of CIRP costs, operational creditors including government creditors and the 1st tranche to Secured and unsecured financial creditors 13. Payment of 2nd tranche to financial creditors, both secured and unsecured. Y+30 days 14. Payment of 3rd tranche to financial creditors, both secured and unsecured. Y+45 days 15. Payment of 4th tranche to financial creditors, both secured and unsecured. Y+60 days
Further, the Applicant has also informed the CoC that the Approved Resolution Plan is compliant as per the Code and the Rules and Regulations made thereunder.
Consequently, the Applicant has issued the Letter of Intent dated August 23, 2023, to the Successful Resolution
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Applicant. On August 25, 2023, the Successful Resolution Applicant has unconditionally accepted the Letter of Intent.
Further, as required under the RFRP, the Successful Resolution Applicant also submitted a Performance Bank Guarantee (“PBG”) dated August 25, 2023, bearing number 0734723BG0000178, being the 15% of the total resolution plan amount i.e. Rs. 57,68,10,000/- (Rupees Fifty Seven Crore Sixty Eight Lakh and Ten Thousand Only.
It is pertinent for this Hon’ble Tribunal to note that the Approved Resolution Plan submitted by the Successful Resolution Applicant is unconditional. The Successful Resolution Applicant has also sought certain prayers, reliefs, concession and entitlement, which are set out in Part 15 of the Approved Resolution Plan.
Lastly, the compliance certificate under Form H provided under the CIRP Regulations is annexed hereto:
FORM H
COMPLIANCE CERTIFICATE
(Under Regulation 39(4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016
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I, Mr. Sripatham Venkatasubramanian Ramkumar, an insolvency professional enrolled with Indian Institute of Insolvency Professionals of ICAI and registered with the Board with registration number IBBI/IPA-001/IP-P00015/2016-2017/10039, am the resolution professional for the corporate insolvency resolution process (CIRP) of Privilege Industries Limited (CD).
- The details of the CIRP are as under:
Sl.
No.
Particulars
Description
1 Name of the CD
Privilege Industries Limited 2 Date of Initiation of CIRP February 15, 2023 3 Date of Appointment of IRP February 15, 2023 (order received on February 20, 2023) 4 Date of Publication of Public Announcement February 22, 2023 5 Date of Constitution of CoC March 14, 2023 6 Date of First Meeting of CoC March 20, 2023 7 Date of Appointment of RP March 31, 2023 (order received on April 18,
8
Date of Appointment of Registered
Valuers
April 28, 2023
9
Date of Issue of Invitation for EoI
May 6, 2023
10
Date of Final List of Eligible
Prospective Resolution Applicants
May 29, 2023
11
Date of Invitation of Resolution
Plan
May 6, 2023; May 25,
2023; June 28, 2023;
July 5, 2023
12
Last Date of Submission of
Resolution Plan
July 21, 2023
13
Date of Approval of Resolution
Plan by CoC
August 23, 2023
14
Date of Filing of Resolution Plan
with Adjudicating Authority
August 30, 2023
15
Date of Expiry of 180 days of
CIRP
September 4, 2023
(considering 23 days
exclusion of timelines
sought per application
filed with Hon’ble
NCLT, Mumbai bench
14
-
I have examined the Resolution Plan received from Resolution Applicant (SNJ Breweries Private Limited) and approved by Committee of Creditors (CoC) of Privilege Industries Limited.
-
I hereby certify that- (i) the said Resolution Plan complies with all the provisions of the Insolvency and Bankruptcy Code 2016 (Code), the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations) and does not contravene any of the provisions of the law for the time being in force. (ii) the Resolution Applicant SNJ Breweries Private Limited has submitted an affidavit pursuant to section 30(1) of the Code on August 11, 2023 with efiling number 2709138069142023) 16 Date of Order extending the period of CIRP Not applicable 17 Date of Expiry of Extended Period of CIRP Not applicable 18 Fair Value RV1 – INR 272 crores RV2 – INR 294 crores Average – INR 283 crores 19 Liquidation value RV1 – INR 205 crores RV2 – INR 220 crores Average – INR 213 crores 20 Number of Meetings of CoC held 7 CoC meetings held on the following dates 1st CoC - March 20, 2023;
2nd CoC – May 5, 2023;
3rd CoC – May 30, 2023; 4th CoC – June 26, 2023; 5th CoC – July 27, 2023; 6th CoC – August 7, 2023; 7th CoC – August 22, 2023
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confirming its eligibility under section 29A of the Code to submit resolution plan. The contents of the said affidavit are in order. (iii) 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 79.60 % of voting share of financial creditors after considering its feasibility and viability and other requirements specified by the CIRP Regulations. (iv) I sought vote of members of the CoC by electronic voting system which was kept open at least for 24 hours as per the regulation 26 (Pursuant to the 6th CoC meeting held on August 7, 2023, the voting window was kept open between 12 PM of August 9, 2023 and 6 PM of August 23, 2023).
- The list of financial creditors of the CD [Privilege Industries
Limited] 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
Omkara ARC
Private Limited
79.60% Voted for 2 Unity Small Finance Bank Limited
20.40% Abstained
Total 100.00%
-
The Resolution Plan includes a statement under regulation 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.
-
The amounts provided for the stakeholders under the Resolution Plan is as under:
(Amount in Rs) Sl. No . Categor y of Stakeho lder Sub-Category of Stakeholder Amount Claimed Amount Admitted Amount Provided under the Plan Amount Provided to the Amount Claimed (%) (1) (2) (3) (4) (5) (6) (7)
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1 Secured Financi al Creditor s (Note 1)
(a) Creditors not having a right to vote under sub- section (2) of section 21
(b) Other than (a) above:
(i) who did not vote in favour of the resolution Plan (Note 1) 2,53,13,85 5 2,53,13,85 5 1,72,39,00 0 68.10% (ii) who voted in favour of the resolution plan 5,54,42,73 ,382 5,54,42,73 ,382 3,77,57,45 ,000 68.10% Total[(a) + (b)] 5,56,95,87 ,237 5,56,95,87 ,237 3,79,29,84 ,000 68.10% 2 Unsecu red Financi al Creditor s
(a) Creditors not having a right to vote under sub- section (2) of section 21
(b) Other than (a) above:
(i) who did not vote in favour of the resolution Plan (Note 1) 1,39,57,65 ,086 1,39,57,65 ,086 1,72,01,83 1 1.23% (ii) who voted in favour of the resolution plan
Total[(a) + (b)] 1,39,57,65 ,086 1,39,57,65 ,086 1,72,01,83 1 1.23% 3 Operati onal Creditor s
(a) Related Party
of
Corporate
Debtor
2,88,23,43
2
(b) Other than (a) above: (i)Government
(i)(a) Employee State Insurance Corporation 45,988 45,988 19,408 42.20% (i)(b) Deputy Commissioner of State Tax (MUM-E609), 14,83,85,4 00 5,39,07,40 7 2,27,48,92 6 42.20%
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Govt.
of
Maharashtra –
Relating to CD’s
operations
(i)(c) Deputy
Commissioner
of
State
Tax
(MUM-E609),
Govt.
of
Maharashtra –
Relating
to
operations
of
Crown Beers
95,86,76,4
18
15,39,51,4
99
Please refer Note 2
below
(i)(d) Municipal
Corporation
of
Greater
Mumbai
5,68,56,35
4
(ii)Workmen
(iii) Employees
Total[(a) + (b)] 1,19,27,87 ,592 20,79,04,8 94 2,27,68,33 4 1.91% (Refer Note 2 below) 4 Other debts and dues
8,68,23,65 7
Grand Total
8,24,49,63 ,572 7,17,32,57 ,217 3,83,29,54 ,165 46.49% Note 1 – The resolution plan provides for profits earned during CIRP period and EBITDA generated between Hon’ble NCLT approval date and Closing date to be passed on to the Secured Financial Creditors in addition to the consideration as stated in above table. Note 2 – Resolution applicant has provided the following in its resolution plan with respect to admitted claims of Operational Creditors received from Deputy Commissioner of State Tax (MUM- E609), Govt. of Maharashtra relating to bottling operations of Crown Beers India Private Limited (Crown Beers) – “100% will be available from Crown Beers as per the pass through clause contained in the settlement agreement dated 18th October 2021 which is entered into between the Corporate Debtor and Crown Beers. However, it is clarified that in terms of the resolution plan, the Corporate Debtor as well as the Resolution applicant shall not be liable in any manner for these debts and all recoveries in this regard may be made from Crown Beers.” (reference - Clause 3.3 (iv)
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of the resolution plan). The pay-out to Deputy Commissioner of State Tax (MUM-E609), Govt. of Maharashtra has been revised in accordance with the Affidavit dated 24.11.2023, filed by SNJ Breweries Private Limited- the Successful Resolution Applicant. The said redistribution has also been consented by Omkara Asset Reconstruction Private Limited (CoC member having 79.60% majority) vide its Affidavit dated 27.11.2023. Note 3 - Unity Small Finance Bank Limited had abstained from voting on the resolution plans. They have also filed an IA before the Adjudicating authority, IA/3592/2023 for considering themselves as Secured Financial Creditors.
-
The interests of existing shareholders have been altered by the Resolution plan as under: Sl. No Category of Share Holder 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 44,51,242 Nil 100% Nil 2 Preference Nil Nil Nil Nil
-
The compliance of the Resolution Plan is as under: Section of the Code / Regulatio n No.
Requirement with respect to Resolution Plan Clause of Resoluti on Plan Complia nce (Yes / No) 25(2)(h) Whether the Resolution Applicant meets the criteria approved by the CoC having regard to the complexity and scale of operations of business of the CD? Section on Profile of RA and its group Yes Section 29A
Whether the Resolution Applicant is eligible to submit resolution plan as per final list of Resolution Professional or Order, if any, of the Adjudicating Authority? Format XI of the Resoluti on Plan Yes Section 30(1) Whether the Resolution Applicant has submitted an affidavit stating that it is eligible? Format XI of the Resoluti on Plan, Clause 2 of the Resoluti on Plan Yes
19
Section
30(2)
Whether the Resolution Plan-
(a) provides for the payment of insolvency
resolution process costs?
(b) provides for the payment to the
operational creditors?
(c) provides for the payment to the
financial creditors who did not vote in
favour of the resolution plan?
(d) provides for the management of the
affairs of the corporate debtor?
(e) provides for the implementation and
supervision of the resolution plan?
(f) contravenes any of the provisions of
the law for the time being in force?]
Clause 3.3.(ii); Clause 3.3.(xiii);
Clause
3.3.(viii);
Clauses
5 & 6;
Clauses
3.2 & 7;
Clause
11
Yes
Section
30(4)
Whether the Resolution Plan
(a) is feasible and viable, according to the
CoC?
(b) has been approved by the CoC with
66% voting share?
Clause
8;
Yes, refer
voting
results
forming
part
of
minutes
of
6th
CoC
meeting
Yes
Section
31(1)
Whether
the
Resolution
Plan
has
provisions
for
its
effective
implementation plan, according to the
CoC?
Clauses
3.2 & 7
Yes
Regulatio
n38 (1)
Whether
the
amount
due
to
the
operational
creditors
under
the
resolution plan has been given priority in
payment over financial creditors?]
Clause
3.3.(xiii);
Yes
Regulatio
n 38(1A)
Whether the resolution plan includes a
statement as to how it has dealt with the
interests of all stakeholders?
Clauses
12,
17.(iii),
Annexur
e E of the
Resoluti
on plan
Yes
Regulatio
n 38(1B)
(i) Whether the Resolution Applicant or
any of its related parties has failed to
implement or contributed to the failure of
Resoluti
on
Applican
t
has
Yes
20
implementation of any resolution plan approved under the Code. (ii) If so, whether the Resolution Applicant has submitted the statement giving details of such non- implementation?] declared that it has not failed to impleme nt any resolutio n plan approved under the Code
- Clause
11
Regulatio
n 38(2)
Whether the Resolution Plan provides: (a) the term of the plan and its implementation schedule?
(b) for the management and control of the business of the corporate debtor during its term?
(c) adequate means for supervising its implementation?
Clause 7;
Clauses 5,6 & 7; Clauses 5,6 & 7
Yes 38(3) Whether the resolution plan demonstrates that – (a) it addresses the cause of default? (b) it is feasible and viable? (c) it has provisions for its effective implementation? (d) it has provisions for approvals required and the timeline for the same? (e) the resolution applicant has the capability to implement the resolution plan?
Clause
18;
Clause
8;
Clauses
3.2 & 7;
Clauses
3.3, 5 to
7;
Clauses
3.3, 4, 5
to 7
Yes
39(2)
Whether the RP has filed applications in
respect of transactions observed, found
or determined by him?
No
Not
applica
ble
Regulatio
n 39(4)
Provide details of performance security
received, as referred to in sub-regulation
(4A) of regulation 36B.]
August
25, 2023
Yes
- The CIRP has been conducted as per the timeline indicated as under:
21
Section of the
Code /
Regulation
No.
Description of Activity
Latest
Timeline
under
regulation
40A
Actual Date
Section 16(1) Commencement of CIRP and
Appointment of IRP
T
February
20,
2023(date of
receipt of
CIRP
initiation
order by
IRP)
Regulation
6(1)
Publication of Public
Announcement
T+3
February
22, 2023
Section
15(1)(c)
/Regulation
12 (1)
Submission of Claims
T+14
March 6,
2023
Regulation
13(1)
Verification of Claims
T+21
March 14,
2023
Section
26(6A) /
Regulation
15A
Application for Appointment of
Authorised Representative, if
necessary
T+23
Not
applicable
Regulation
17(1)
Filing of Report Certifying
Constitution of CoC
T+23
March 14,
2023
Section 22(1)
and
regulation
17(2)
First Meeting of the CoC
T+30
March 20,
2023
Regulation
35A
Determination of fraudulent
and other transactions
T+115
Fraudulent
& other
transactions
have not
been
determined
Regulation
27
Appointment of two Registered
Valuers
T+47
April 28,
2023
Regulation
36 (1)
Submission of Information
Memorandum to CoC
T+54]
May 19,
2023
Regulation
36A
Invitation of EoI
T+75 May 6, 2023
Publication of Form G
T+75
May 6,
2023; 1st
corrigendum
22
issued on May 25, 2023 to provide for revision of date of objections to provisional list of PRAs; 2nd corrigendum issued on June 28, 2023 and 3rd corrigendum issued on July 5, 2023 for revision of last date of submission of resolution plans Provisional List of Resolution Applicants T+100 May 23, 2023 Final List of Resolution Applicants T+115 May 30, 2023 Regulation 36B Issue of Request for Resolution Plan, which includes Evaluation Matrix and Information Memorandum to Resolution Applicants T+105 May 31, 2023 Section 30(6) / Regulation 39(4) Submission of CoC approved Resolution Plan T+165 August 30, 2023 Section 31(1) Approval of Resolution Plan T=180
- The time frame proposed for obtaining relevant approvals is as under:
23
Sl. No. Nature of Approval Name of applicable Law Name of Authority who will grant Approval When to be obtained 1 Refer Clause 15 of the Resolution plan for complete list of reliefs and concessions required for implementation including from whom and the estimated timelines envisaged. FEMA, SEBI, FERA, RBI, AML, ROC, Income Tax, GST, Sales tax, Business permits, SARFEASI, other statutory approvals, etc. Authority competent to grant approval under respective law Upon the Approval of Resolution Plan, the resolution applicant shall take all requisite steps for obtaining necessary approvals in accordance with applicable laws.
-
The Resolution Plan is not subject to any contingency.
-
Following are the deviations / non-compliances of the provisions of the Insolvency and Bankruptcy Code, 2016, regulations made or circulars issued thereunder (If any deviation/ non-compliances were observed, please state the details and reasons for the same):
Sl. No. Deviation/Non- compliance observed Section of the Code / Regulation No. / Circular No. Reasons Whether rectified or not NIL
- The Resolution Plan is being filed 5 days before the expiry of the period of CIRP provided in section 12 of the Code.
14A. Whether the resolution professional has, in accordance with regulation 35A,- (a) applied to the Adjudicating Authority on or before the one hundred and thirty-fifth day of the insolvency commencement date:
No, as no preferential and other transactions were determined (b) filed Form CIRP 8 with the Board on or before the one hundred and fortieth day of the insolvency commencement date: Yes, on 5th July 2023
24
-
Provide details of section 66 or avoidance application filed / pending. Sl. No.
Type of Transaction Date of Filing with Adjudicating Authority Date of Order of the Adjudicating Authority Brief of the Order 1 Preferential transactions under section 43 No preferential, undervalued, extortionate and fraudulent transactions as per applicable provisions of IBC, were found in the Corporate Debtor Not applicable 2 Undervalued transactions under section 45 3 Extortionate credit transactions under section 50 4 Fraudulent transactions under section 66 -
I, Mr. Sripatham Venkatasubramanian Ramkumar hereby certify that the contents of this certificate are true and correct to the best of my knowledge and belief, and nothing material has been concealed therefrom.
Name of the Resolution Professional: Mr. Sripatham Venkatasubramainan Ramkumar IP Registration No: IBBI/IPA-001/IP-P00015/2016-2017/10039 Address as registered with the Board: 1605, Block 1, Myhome Vihanga, Gachibowli, Hyderabad, Telangana ,500032 Email id as registered with the Board: Ramkumar.sv@in.ey.com
Date: August 30, 2023
Place: Hyderabad
It is also pertinent to note that the value offered by the resolution applicant, SNJ Breweries Private Limited to all the stakeholders is more than the fair value of the assets of the
25
Corporate Debtor and a summary of the liquidation and fair value of Corporate Debtor is reproduced below:
Valuer
Liquidation
Value
(INR Cr)
Fair Value (INR
Cr)
Inturi
Veeriah,
Aswarth M along
with Ravisankar
D – Registered
Valuer 1
INR 205 Crs
INR 272 Crs
Pro Valuer (OPC)
Pvt
Ltd
along
with
Arvind
Puppala Srinivas
and
Gutta
Koteswara Rao –
Registered
Valuer 2
INR 220 Crs
INR 294 Crs
Average Value
INR 213 Crs
INR 283 Crs
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
26
under the Resolution Plan is distributed in accordance
with priority under Section 53(1), whichever is higher.
iii.
The Resolution Applicant has agreed to meet the cost of
project from existing resources including infusion of
equity/debt through the parent company, from sale of
unsold inventories and if required from raising finance
through external sources.
iv.
The Resolution Applicant has also agreed that dissenting
financial creditors shall be paid in priority and not less than
the value they would have been paid in the event of
liquidation of the Corporate Debtor. The Respondent has
proposed to liquidation value to unsecured financial
creditors who dissent from the plan.
v.
Section 30(2)(c) provides for the management of the affairs of
the Corporate Debtor after approval of the Resolution Plan.
vi.
Section 30 (2) (d) & Regulation 38(2)(c) Provides for a term of
the plan, implementation schedule and supervision of the
Resolution Plan.
vii.
The Resolution Applicant proposes to appoint suitably
qualified and experienced persons, key personnel and other
officer for operations of the Corporate Debtor.
viii. The Resolution Plan does not contravene any of the
provisions of the law for the time being in force. The
Successful Resolution Applicant has undertaken to comply
with the provisions of law in complying with the Resolution
Plan.
ix.
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).
27
x.
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.
xi.
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.
xii. 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
28
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)).
The CoC has, with a 79.60% majority, approved the Resolution Plan dated August 2, 2023, of the Successful Resolution Applicant i.e., SNJ Breweries Private Limited (“Approved Resolution Plan”), as per Section 30 (4) of the Code.
29
In K. Sashidhar v. Indian Overseas Bank & Others: 2019 SCC Online SC 257 (2019) 12 SCC 150) the Hon’ble Apex Court held that if the CoC had approved the Resolution Plan by requisite percent of voting share, then as per section 30(6) of the Code, it is imperative for the Resolution Professional to submit the same to the Adjudicating Authority (NCLT). On receipt of such a proposal, the Adjudicating Authority is required to satisfy itself that the Resolution Plan as approved by CoC meets the requirements specified in Section 30(2). The Hon’ble Court observed that the role of the NCLT is ‘no more and no less’. The Hon’ble Court further held that the discretion of the Adjudicating Authority is circumscribed by Section 31 and is limited to scrutiny of the Resolution Plan “as approved” by the requisite percent of voting share of financial creditors. Even in that enquiry, the grounds on which the Adjudicating Authority can reject the Resolution Plan is in reference to matters specified in Section 30(2) when the Resolution Plan does not conform to the stated requirements. 25. The Hon’ble Apex Court at para 42 in Committee of Creditors of Essar Steel India Limited Vs. Satish Kumar Gupta & Ors.: (2019) SCC Online, clearly laid down that the Adjudicating Authority would not have power to modify the Resolution Plan which the CoC in their commercial wisdom have approved.
“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
30
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).”
In view of the above ruling of the Apex Court, the legislature has given paramount importance to the commercial wisdom of committee of creditors (CoC) and the scope of judicial review by the Adjudicating Authority (AA) is limited to the extent provided under section 31 of Code and of the Appellate Authority is limited to the extent provided under sub-section (3) of section 61 of the Code, is no more an untouched-matter.
In view of the discussions and the law thus settled, the instant Resolution Plan meets the requirements of Section 30(2) of the Code and Regulations 37, 38, 38(1A) and 39(4) of the Regulations. The Resolution Plan is not in contravention of any of the provisions of Section 29A of the Code and is in accordance with law. The Resolution Plan is feasible and viable. There are no workers claims. Resolution Applicant agreed to pay the full CIRP costs and also future costs if any as certified by the Resolution Professional and CoC. The Resolution Plan balances the interest of all the stakeholders and thus it deserves to be approved. Order I. The Interlocutory Application No. 4004 of 2023 is allowed. The Resolution Plan submitted by SNJ Breweries Private Limited, is hereby approved. It shall become effective from
31
this date and shall form part of this order. It shall be binding on the Corporate Debtor, its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of payment of dues arising under any law for the time being in force is due. II. The approval of the Resolution Plan shall not be construed as waiver of any statutory obligations of the Corporate Debtor and shall be dealt by the appropriate Authorities in accordance with law. It is seen that the Resolution Applicant sought several dispensations, concessions and waivers. Any waiver sought in the Resolution plan shall be subject to approval by the Authority concerned in the light of the Judgment of Supreme Court in Ghanshyam Mishra and Sons Private Limited v/s. Edelweiss Asset Reconstruction Company Limited 2022 LiveLaw (SC) 771, the relevant para’s of which are extracted herein below: “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
32
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.”
III.
We shall clarify here that any amount recovered under any
avoidance applications relating to the Corporate Debtor
being allowed by the Adjudicating Authority would ensure
unto the benefit of the Resolution Applicant.
IV.
The Memorandum of Association (MoA) and Articles of
Association (AoA) shall accordingly be amended and filed
with the Registrar of Companies (RoC), concerned for
information and record. The Resolution Applicant, for
effective implementation of the Plan, shall obtain all
necessary approvals, under any law for the time being in
force, within such period as may be prescribed.
V.
The moratorium under Section 14 of the Code shall cease to
have effect from this date.
VI.
The Applicant and the Monitoring Committee shall supervise
the implementation of the Resolution Plan and the Applicant
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shall file status of its implementation before this Authority from time to time, preferably every quarter. VII. The Applicant shall forward all records relating to the conduct of the CIRP and the Resolution Plan to the IBBI along with copy of this Order for information. VIII. The Applicant shall forthwith send a copy of this Order to the CoC and the Resolution Applicant for necessary compliance. IX. The Interlocutory Application No. 4004 of 2023 is accordingly allowed and disposed of.
Sd/- Sd/-
Madhu Sinha Reeta Kohli Member (Technical) Member (Judicial) //VLM//
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