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The National Company Law Tribunal, Kolkata Bench has approved the Resolution Plan of SS Natural, a consortium of SSNRPL and Shyam SEL & Power Ltd, for Ramsarup Industries.
The Resolution Plan was approved by the Committee of Creditors (CoC) by a voting share of 74.41%.
Apart from approving the Resolution Plan, a two-member Bench of Member (judicial) Jinan KR and Member (Technical) Harish Chander Suri also imposed heavy costs on the Promoter Director of Ramsarup and the two other resolution applicants in the case.
Ramsarup Industries had initiated corporate insolvency resolution process under Section 10 of the Insolvency and Bankruptcy Code, 2016 owning to its inability to pay its debt.
The application by the Resolution Professional for Ramsarup Industries seeking approval of SS Natural’s Resolution Plan was opposed by as many as 30 applications by several stakeholders including the Operational Creditors, Financial Creditors, unsuccessful bidders and Promoter Director of the suspended Board of Directors of Ramsarup Industries.
Aashish Jhunjhunwala, Promoter Director of Ramsarup Industries challenged the approval on the ground that bid amount was substantially lower than the liquidation value of the company. He raised several other objections to the Plan such as ineligibility of SS Natural under Section 29A and the methodology followed in the case to distribute the money.
Similarly, the two unsuccessful resolution applicants, Orissa Metaliks Pvt Ltd (OMPL) and SREI Multiple Asset Investment Trust–Vision India also raised several objections.
SREI contended that the offers to Ramsarup Industries were “leaked” to the SS Natural by the “advisors” to the Resolution Professional and that SS Natural was not eligible under Section 29A.
OMPL also argued that SS Natural was not eligible under Section 29A.
Rejecting the arguments put forth by the Promoter Director, the Adjudicating Authority stated that offers were made on the basis of the admitted claim of the creditors and distribution of bid was not in contravention of IBC or its Regulations. It further added that Section 29A objection was raised for the sake of it, without any supporting contentions.
It further observed,
“This is a unique case wherein the promoter director of the Corporate Debtor had filed the CP for CIRP under Section 10 of the Code showing his inability to pay. After admission and when the CIRP period expired and the application filed by the RP came up for consideration, the attitude of the promoter director has changed.”
Doubting the intentions of the Promoter Director, the Adjudicating Authority added,
“The overall conduct of the applicant in filing multiple applications cannot be considered as with genuine object to get relief as prayed for, by the object to protract the matter. In our view is an abuse of the process of this Tribunal… Filing of case by some of the financial creditors and belatedly challenging the qualification of the resolution applicant by two unsuccessful bidders at the instigation of this director also cannot be ruled out from the circumstances brought out in the case in hand.”
The Adjudicating Authority stated that if this kind of approach was not prevented, a wrong message would be sent to other similarly situated directors of a corporate debtor company. It thus imposed a cost of Rs 25 lakh on the Promoter Director to meet the ends of justice.
The challenges by the two unsuccessful bidders also met with the same fate.
The Adjudicating Authority imposed costs of Rs 5 lakh on OMPL and Rs 10 lakh on SREI Multiple Asset Investment Trust – Vision India Fund.
“In our view awarding the said cost is just and proper to keep the proceedings in a time-bound manner so as to achieve the objective of the Code. If we do not do so, it would give a wrong message to the similarly situated applicants who wish to come forward to raise challenge without any right cost.”
It has further added that the Resolution Plan approved by the CoC shall include the portion of security expenses incurred by the Financial Creditor/ West Bengal Industrial Development Corporation Ltd (WBIDCL) which was admitted by the Resolution professional in the upfront amount payable by the Resolution Applicant to the creditors.
The applications filed by the operational creditors was also dismissed. The Adjudicating Authority observed that in this case, the same treatment was given to the operational creditors as well as the financial creditors.
It noted that while the financial creditors were taking a haircut of 94% and would thus get 5% of their admitted claim of Rs 5853 crore, the operational creditors would get 10.50 crore out of the total admitted claim of 224 crore ie. 38.82%.
The payment to workmen was also 90% of the admitted claim.
Objections by some of the Financial Creditors with respect to the methodology applied by the CoC while distributing the bid amount on the basis of security of interest was also rejected. The Adjudicating Authority denied all claims of discrimination among the same class of financial creditors and stated that the methodology was approved by over 74% of the CoC and was not in violation of Section 30 IBC.
Similarly, objections by certain asset reconstruction companies were also dismissed.
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