During Pendency Of Liquidation Application, NCLT Kolkata Directs CoC To Re-Vote On Promoter's Rejected Resolution Plan, Since Plan Value Has Been Increased
Swetha Shankaran And Sakshi Saraogi
29 Feb 2024 10:09 PM IST
The National Company Law Tribunal (“NCLT”), Kolkata Bench, comprising of Smt. Bidisha Banerjee (Judicial Member) and Shri Arvind Devanathan (Technical Member), has directed the Committee of Creditors (“CoC”) of Simplex Projects Limited (Corporate Debtor) to re-vote on the resolution plan submitted by the Promoter (which was previously rejected), since the Promoter enhanced the plan value by submitting addendums to the plan. The addendum increased the value of resolution plan to over Rs. 228 Crores, which is more than eight times the liquidation value of Rs. 26 Crores.
The Bench has also extended the CIRP period for further 30 days after expiration of 330 days, keeping in view the principle of maximisation of value under IBC.
The direction has been given during the pendency of application seeking liquidation of Corporate Debtor filed by Resolution Professional.
BACKGROUND FACTS
Simplex Projects Limited (“Corporate Debtor”) was admitted into Corporate Insolvency Resolution Process (“CIRP”) by the NCLT on 27.04.2022.
Two resolution applicants submitted resolution plan for the Corporate Debtor to the Resolution Professional, one of which was the Promoter of Corporate Debtor, who met the eligibility criteria under Section 240A and Section 29A of IBC. When both resolution plans were presented before the Committee of Creditors (“CoC”) for voting, none of the plans received majority of votes of 66%, as required under Section 30(4) of IBC read with regulation 39 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“CIRP regulations”).
The proviso to Regulation 39(3B) of the CIRP regulations states, “provided further that where none of the resolution plans receives requisite votes, the committee shall again vote on the resolution plan that received the highest votes, subject to the timelines under the Code.”
Accordingly, the resolution plan submitted by the Promoter, which had received the highest vote (not amounting to 66%) was put for re-voting. However, once again the Promoter's plan did not receive the requisite 66% majority votes.
Subsequently, the Resolution Professional filed an application before NCLT seeking liquidation of Corporate Debtor since the CIRP had exceeded the 330 days period.
During the pendency of the application seeking liquidation, the Promoter submitted two unsolicited addendums to the previously submitted resolution plan. The addendum increased the value of resolution plan to over Rs. 228 Crores, which is more than eight times the liquidation value of Rs. 26 Crores.
The Promoter (“Applicant”) filed an application before the NCLT, seeking withdrawal of the liquidation application and direction to the CoC to re-vote on the resolution plan along with the addendums. It was further prayed that the CIRP be extended by 30 days period so that the revised plan alongwith addendums can be considered by CoC.
The Promoter argued that liquidation is the last resort and the revised addendums provide a value exceeding 8 times the estimated liquidation value of the Corporate Debtor.
The Resolution Professional submitted that the CoC at its 36th Meeting held on 02.11.2023 deliberated on the addendums to resolution plan and opined that the matter will be considered after appropriate directions given by the NCLT.
NCLT VERDICT
The Bench opined that in view of maximisation of value, some more time has to be given to the Resolution Professional vis-à-vis to the CoC for consideration of the addendums submitted by the Promoter.
Accordingly, the Bench has directed the CoC to re-vote on the resolution plan submitted by Promoter after considering the two addendums submitted by the Promoter. Further, the Bench has extended the CIRP of the Corporate Debtor by 30 days, within which the Resolution Professional would complete the CIRP process.
- “We direct the Committee of Creditors to re-vote on the Resolution Plan of the applicant after taking into consideration of the addendums dated 21/09/2023and27/10/2023 submitted by the applicant;
- Accordingly, we extend the CIRP period of the corporate debtor by 30 days from the date of uploading the order on the NCLT Website. RP shall complete the CIRP process accordingly within the extended time.”
The application has been disposed of.
Case Title: State Bank of India Vs Simplex Projects Ltd.
Case No.: C.P. (IB)/56(KB)2019
Counsel For RP: Ms. Kanishka Prasad, Adv.
Counsel for CoC: Mr. Aditya Vikram Singh, Adv. Mr. Dwaipayan Basu Mallick, Adv. Ms. Swita Chakrkaborty, Adv. Mr. Wasim Akram, Adv. Ms. Shreya Chandhok, Adv.
Counsel for Sudarshan Das Mundhra: Mr. Ratanko Banerji, Sr. Adv. Mr. Rishav Banerjee, Adv. Mr. Keshav Tibarewalla, Adv.
Counsel for respondent in IA/909/2023: Mr. Varun Kothari, Adv. Ms. Niharika Singh, Adv.
Authors: Swetha Shankaran (Principal Associate) And Sakshi Saraogi (Associate) at Saraf and Partners.
