State Bank of India Vs Uttam Galva Steels Limited (NCLT Mumbai)
NCLT Mumbai approved the resolution plan submitted by AM Mining India Pvt. Ltd. for Uttam Galva Steel Limited as the same is not contrary to provisions of section 29A of IBC Code and is in accordance with law
Facts- State Bank of India (Financial Creditor) had filed a petition u/s. 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Adjudicating Authority initiated CIRP and Mr. Milind Kasodekar (Applicant) was appointed as the Interim Resolution Professional and thereafter the Resolution Professional.
In response to the invitation for Expression of Interest (EoI), a total of 6 Prospective Resolution Applicants submitted their EoI.
The Resolution Plan submitted by AM Mining India Pvt. Ltd. (Successful Resolution Applicant) was approved by Committee of creditors with 100% voting share. Thereafter, the Resolution Professional filed an application under Section 30(6) of the IBC before the Adjudicating Authority for approval of the successful resolution plan. The Resolution Plan contemplates a total resolution amount of Rs. 4020 Crores.
Conclusion- 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 same needs to be approved. Hence ordered.
FULL TEXT OF THE NCLT JUDGMENT/ORDER
1. The present application is moved by Resolution Professional Mr. Miind Kasodekar (hereinafter called as “the Applicant”) under Section 30 (6) of the Insolvency and Bankruptcy Code, 2016 (“code”) for approval of the resolution plan under the provisions of Section 31(1) of the code, for the Corporate Debtor Uttam Galva Steels Limited (hereinafter called as the “Corporate Debtor”) as approved by 100% voting share of the Committee of Creditors of the Corporate Debtor (hereinafter called as the “CoC”) pursuant to the ninth meeting of the CoC held on 14.05.2021 followed by electronic voting which concluded on 02.06.2021.
2. That State Bank of India, a Financial Creditor of the Corporate Debtor, had filed an application under section 7 of the Code, read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, for initiation of the corporate insolvency resolution process (CIRP) against Uttam Galva Steels Limited (Corporate Debtor).
3. That the said application was admitted by this Tribunal, by its order dated 1 October 2020 (Admission Order), in terms of which, Mr. Miind Kasodekar (Registration No. IBBI/IPA002/IPN00116/2017-18/10285), the Applicant herein, was appointed as the Interim Resolution Professional (IRP). A copy of the Admission Order is annexed with application as Annexure A.
The brief facts leading to the Application are as under:
4. The IRP upon receipt of the Admission Order on 06.10.2020 published a public announcement for initiation of CIRP and invited claims from creditors in Form A on 08.10.2020 in the Free Press Journal (Mumbai edition) (English) and Navshakti (Mumbai edition) (Marathi), along with uploading it on the website of the Corporate Debtor ‘https://www.uttamgalva.com’ in terms of regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations). The last date for submission of claims was 10.2020.
5. On receiving the claims from the creditors of the Corporate Debtor, the IRP constituted the CoC on the basis of the claims received till 20.10.2020. The report certifying the constitution of the CoC was filed on 29.10.2020 with this Tribunal and the first meeting of the CoC was convened on 04.11.2020. In the first meeting of the CoC it was resolved that IRP be appointed as the Resolution Professional of the Corporate Debtor (RP/Applicant).
6. Further, the CoC deliberated and approved inter-alia the appointment of BSRR & Co. as the supporting Insolvency Professional Entity; appointment of Trilegal as the IRP/RP’s legal advisor; appointment of 2 (Two) independent valuers – RBSA Valuation Advisors LLP and RNC Valuecon Advisors LLP for determining the fair value and liquidation value of the Corporate Debtor in terms of regulations 27 and 35 of the CIRP Regulations; appointment of transaction auditor – BDO India LLP (BDO) to review and assess transactions undertaken by the Corporate Debtor under sections 43, 45, 50 and 66 of the Code. The aforementioned resolutions were passed in the first meeting of the CoC and were finalised by the requisite voting share received pursuant to the e-voting which concluded on 10.11.2020.
7. The second meeting of the CoC was convened on 21.11.2020 via video conferencing in compliance with the CIRP Regulations. In the second CoC meeting, the CoC members discussed and voted upon the draft of the Form G and detailed expression of interest (EoI), finalised by e-voting which concluded on 28.11.2020 with 97.15% voting share of the CoC.
8. Further, in compliance with regulation 36A of the CIRP Regulations, on 30 November 2020, the Applicant issued the invitation for EoI in Form G in Business Standard (English) and Navshakti (Marathi) wherein the last date for receipt of EoI was 15 December 2020.
9. On 14.12.2020, pursuant to requests from certain interested parties, the Applicant sought approval from the CoC to extend the timeline for submission of EoI. The CoC duly approved the issuance of an addendum to Form G in order to extend the timeline for submission of EoI by way of email dated 15.12. 2020. The Applicant On 15.12. 2020, issued an addendum to the invitation for EoI in Form G whereby the deadline for submission of EoI was extended to 22 December 2020.
10. In response to the invitation for EoI, a total of 6 (six) Prospective Resolution Applicants (PRA(s)) submitted their EoI, as set out below:
(a) AM Mining India Private Limited;
(b) Kotak Investment Advisors Limited;
(c) JSW Steel Coated Products Limited;
(d) Jindal Steel and Power Limited;
(e) International Asset Reconstruction Company Private Limited; and
(f) ESL Steels Limited.
11. The third meeting of the CoC was convened on 29.12.2020 via video conferencing in compliance with the CIRP Regulations during which, the CoC deliberated and voted on the approval of the draft Request for Resolution Plan (RFRP) and the approval of the draft Evaluation Matrix (Evaluation Matrix). The CoC also ratified and approved the cost of the data room. In the course of the third meeting of the CoC, the terms of the RFRP were discussed in detail including but not limited to the earnest money deposit, the performance security and the right of rejection of resolution plans by the CoC for non-compliance with RFRP.
12. Pursuant to regulation 36A of the CIRP Regulations, on 01.01.2021, the provisional list of eligible PRAs comprising of 5 (Five) out of the 6 (Six) PRAs which submitted EoIs was issued to the CoC, e., within 10 (Ten) days of the last date for submission of EoIs, which was 22.12.2020. The only PRA screened out at this stage was International Asset Reconstruction Company Private Limited on grounds of non-submission of the bank guarantee/refundable deposit. Objections to inclusion or exclusion of any applicant(s) in the provisional list of PRAs were also invited, which were to be submitted on or before 06.01.2021, however, no objections were received.
13. The final list of PRAs comprising of 5 (Five) PRAs was issued to the CoC on 16.01.2021. On the same day, access to the virtual data room was also provided to the PRAs.
14. The fourth meeting of the CoC was convened on 30.01.2021, via video conferencing in compliance with the CIRP Regulations, wherein the CoC members discussed and approved the RFRP and the Evaluation Matrix, which was finalised by the requisite voting share received pursuant to the e-voting which concluded on 03.02.2021 with 95.76% voting share of the CoC. Thereafter, on 03.02.2021, the Evaluation Matrix and RFRP were issued as per regulation 36B of CIRP Regulations.
15. That the last date of submission of resolution plans under the RFRP was 05.03.2021. However, certain PRAs requested the extension of timeline for submission of plans for a period of 2 (Two) to 3 (Three) Pursuant to the aforementioned requests, the Applicant convened the fifth meeting of the CoC on 02.03.2021 via video conferencing in compliance with the CIRP Regulations. The CoC deliberated and approved the the extension of the last date of submission of resolution plans and the extension of the CIRP timeline by 90 (ninety) days which was finalised by the requisite voting share received pursuant to the e-voting which concluded on 04.03.2021.
16. The Applicant filed an Interlocutory Application before this Tribunal seeking extension of the timeline for completion of the CIRP by 90 (Ninety) days (A. No. 564 of 2021) (Extension Application). Pursuant to this, vide order dated 16.03.2021, this Tribunal granted the extension of the timeline for completion of the CIRP by an additional 90 (Ninety) days starting from 01.04.2021, since the period of 180 (One Hundred and Eighty) days was expiring on 31.03.2021.
17. The RFRP, 1 (One) draft resolution plan was received, from AM Mining India Private Limited (Resolution Applicant) accompanied by the eligibility affidavit under section 29A of the Code and undertaking in hard copy as well as soft copy on 19.03.2021.
18. The Applicant convened the sixth meeting of the CoC on 20.03.2021 via video conferencing in compliance with CIRP Regulations. During the sixth meeting of the CoC, the resolution plan dated 19.03.2021 was opened in front of members of the CoC and the Resolution Professional and its advisors. The Resolution Applicant was also present at the time of the opening of the said resolution plan. The CoC also approved the budget for appointment of advisor to verify compliance with section 29A, finalised by e-voting which concluded on 24 March 2021 with 91.34% voting share of the CoC.
19. The CoC convened seventh meeting on 01.04.2021 via video conferencing in compliance with the CIRP Regulations. During the seventh meeting the CoC inter alia, discussed and deliberated on the findings of the valuation reports prepared by valuation agencies as presented by the respective agencies; the terms of the resolution plan dated 19.03.2021; the appointment of Grant Thornton Bharat as the agency to evaluate compliance with section 29A of the Code; and an update on the operations of the Corporate Debtor.
20. That the eighth meeting of the CoC was convened on 07.04.202 1 via video conferencing in compliance with the CIRP Regulations. At this meeting, the Resolution Applicant was called to discuss the broad contours of the resolution plan dated 19.03.2021 with the CoC. The representative of the Resolution Applicant covered inter alia the overview of the Resolution Applicant brief background of the Corporate Debtor, and the business plan for the Corporate Debtor. The CoC discussed the resolution plan dated 19.03.2021 with the Resolution Applicant and suggested certain points that may be considered by the Resolution Applicant. The following resolutions in relation to the CIRP were discussed at the eighth meeting of the COC:
(a) Summary of the terms of the resolution plan dated 19.03.2021 as presented by the Resolution Applicant; and
(b) Summary of findings on the draft resolution plan as presented by the bid evaluation advisor, BDO India LLP, to the CoC.
21. Pursuant to the comments received from the legal advisors of the CoC and the Applicant, the Resolution Applicant submitted the revised resolution plan on 20.04.2021. Further comments from the legal advisors of the CoC and the Applicant on the terms of the resolution plan dated 20 April 2021.
22. In response to the comments received from the CoC and the Applicant the Resolution Applicant submitted a further revised resolution plan dated 09.05.202 1 (Resolution Plan) addressing the comments from the legal advisors of the CoC and Applicant.
23. The ninth meeting of the CoC was convened on 14.05.202 1 via video conferencing in compliance with the CIRP Regulations to discuss the following agenda items:
(a) The estimated liquidation cost, in the event of liquidation, as required under Regulation 39B of the CIRP Regulations;
(b) The recommendation of the CoC, in the event of liquidation, as required under Regulation 39C of the CIRP Regulations;
(c) The fee of the liquidator, in the event of liquidation, as required under Regulation 39D of the CIRP Regulations;
(d) The report prepared on section 29A of the Code prepared by Grant Thornton [Bharat], the agency appointed in the seventh CoC meeting to evaluate compliance with section 29A of the Code; and
(e) The transaction audit report dated 12 May 2021 (TAR) prepared by BDO.
24. During the ninth meeting of the CoC, the Applicant informed the CoC that the Resolution Plan is legally compliant with the provisions of the Code, and the regulations thereunder, and the RFRP and the Resolution Applicant is eligible under Section 29A of the Code. Further, BDO India LLP, the bid evaluation advisor appointed by the CoC, informed the CoC that,
(i) the Resolution Plan meets the qualitative and quantitative criteria as indicated in the Evaluation Matrix approved by the CoC during the third meeting of the CoC;
(ii) the Resolution Plan is feasible and viable and that the revenue and EBITDA projections under the Resolution Plan are achievable and reasonable; and
(iii) the Letter of Commitment provided by the Resolution Applicant confirms the eventuality of the Resolution Applicant honouring the proposed commitment under the Resolution Plan.
25. Thereafter, the Resolution Plan was put to e-voting by the Applicant in terms of regulation 25 of the CIRP Regulations, from 2:00 PM on 05.2021 till 12:00 PM on 29.05.2021, which was further extended up to 6:00 PM on 02.06.2021.
26. The Resolution Plan was approved by 100% voting share of the CoC through e-voting which concluded on 2 June 2021 after considering the feasibility, viability and manner of distribution of the Resolution An extract of the resolution passed in this regard by the CoC is set forth hereinbelow:
“RESOLVED THAT the resolution plan dated May 9, 2021 submitted by AM Mining India Private Limited be approved by the Committee of Creditors of Uttam Galva Steels Limited pursuant to Section 30(4) of the Insolvency and Bankruptcy Code, 2016, and the rules and regulations thereunder, each, as amended.”
A copy of the voting results in relation to the ninth meeting of the CoC is annexed with application as Annexure M.
27. The Applicant has issued a letter of intent (on the basis of instructions from the CoC) on 02.06.2021 (the “LoI”) to the Resolution Applicant pursuant to the result of e-voting approving the Resolution Plan. The Resolution Applicant being the Successful Resolution Applicant in terms of the RFRP has accepted the LoI unconditionally and provided a Performance Bank Guarantee in favour of State Bank of India. A copy of the LoI accepted by the Resolution Applicant, and an acknowledgment of receipt of the Performance Bank Guarantee by State Bank of India are annexed with application as Annexure N and Annexure O, respectively.
28. The Applicant has hereinbelow provided details of the claims filed and admitted till date:
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