NCLT Mumbai Approves ACME Cleantech's Resolution Plan For Reliance Big Private Limited

The National Company Law Tribunal (NCLT), Mumbai bench comprising Justice V. G. Bisht (Judicial Member) and Shri Prabhat Kumar (Technical Member) has approved the Resolution Plan for Reliance Big Private Limited submitted by ACME Cleantech Solutions Private Limited. Brief Facts: Mr. Rohit Ramesh Mehra (“Applicant”), Resolution Professional of Reliance Big Private Limited (“Corporate debtor”) moved the application under Section 30(6) r/w Section 31 (l) of the Insolvency and Bankruptcy Code, 2016 (“Code”) r/w Regulation 39 (4) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons), 2016 (“IBBI Regulations”) for seeking approval of the Resolution Plan along with the Addendum thereto submitted by Mr. Manoj Kumar Upadhyay (“Successful Resolution Applicant/SRA”) and as approved in 100% majority by Committee of Creditors. The Corporate Debtor owns a wind energy generator in Tamil Nadu and two land parcels in Thiruvallur and Tirunelveli Districts and supplies electricity to the Tamil Nadu Electricity Board. Upon failure to maintain the security cover as per the terms of the Transaction documents relating to subscription of debentures, the Corporate debtor was obligated to a Mandatory Prepayment Event whereby the Corporate debtor had to ensure that all the outstanding amounts are deposited in the designated accounts. The NCLT admitted the Corporate Debtor into the Corporate Insolvency Resolution Process (CIRP) under section 7 of the Code. A public announcement inviting claims from creditors was made. Only one resolution plan, submitted by Mr. Manoj Kumar Upadhyay, was received. The Committee of Creditors (“CoC”) raised concerns regarding contingencies and compliance issues. The applicant submitted a revised resolution plan on 20.02.2024 and filed an addendum on 19.03.2024. Salient Features of the Resolution Plan: A) Amount under the Resolution Plan The Resolution Plan is for an aggregate amount of Rs. 351 Lakhs. As per the Resolution Plan, prior to the effective date and within 25 days of the Approval date, Upfront Cash payment of Rs. 4 crores has to be infused into the Corporate Debtor. B) Treatment of CIRP Costs The unpaid CIRP costs shall be funded from the internal accruals and cash flows of the Corporate Debtor as of the Effective Date and paid in priority over other debts. C) Treatment of Standstill Period Costs The Standstill Period Costs shall be paid in full on the Effective Date. D) Treatment of Operational Creditors The SRA proposes a payment of Rs. 0.50 lakhs towards claims filed by the Operational Creditors, while, the RP has admitted an amount equal to Rs. 66.66 lakhs towards Operational creditors other than Workmen and employee or Government dues. E) Treatment of Statutory Dues The Resolution Applicant has allocated NIL amounts for statutory creditors and Governmental Authorities as full and final settlement of dues and liabilities for the period prior to the Plan Approval Date. F) Treatment of Secured Financial Creditors The Resolution Applicant proposes to pay Rs. 350 lakhs, in the form of non-convertible debentures, along with all associated securities and encumbrances, to the Resolution Applicant on the Effective Date, which is also the FC discharge amount. G) Treatment of Unsecured Financial Creditors The SRA proposes payment of 28 lakhs however, no payment is admitted towards the unsecured financial creditors, as they are all related party unsecured Financial creditors. H) Treatment of Dissenting Financial Creditors As per the requirement of Section 30(2)(b) of the IBC, all the Financial Creditors who do not vote in favour of the Resolution Plan shall be paid such amount which shall be equal to the amount to be paid to such Financial Creditors in accordance with subsection (1) of Section 53 of the Code in the event of a liquidation of the Corporate Debtor. This payment will be made with priority over the Financial Creditors who voted in favour of the Resolution Plan, as mandated by Regulation 38(1)(b) of the CIRP Regulations. Observations: The court referred to the judgment of the Supreme Court in K Sashidhar v. Indian Overseas Bank & Others, (2019) 12 SCC 150, where it was held that: "…… the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 limited to scrutiny of the resolution plan 'as approved' by the requisite per cent of voting share of financial creditors." The Tribunal noted that the CoC had approved the plan with a 100% majority after considering concerns regarding compliance and inter-se distribution. The Tribunal held that the Resolution Plan complied with the relevant provisions of the Code and CIRP Regulations. It noted that the Resolution provided for: Payment of CIRP Cost as specified u/s 30(2)(a) of the Code. Repayment of...

NCLT Mumbai Approves ACME Cleantech's Resolution Plan For Reliance Big Private Limited

Tazeen Ahmed

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