Approval of Resolution Plan - U B S Publishers Distributors Private Limited

IA. No. 2920/ND/2023 in (IB)-1095/(ND)/2020 Pearson India Education Service Pvt. Ltd. Vs. U.B.S. Publishers Distributions Pvt. Ltd.

ORDER

PER: SH. L. N. GUPTA, MEMBER (T)

The present IA No. 2920 of 2023 has been filed by Mr. Ajay Gupta, Resolution Professional (RP) of U.B.S Publishers Distributors Private Limited (hereinafter referred to as, the ‘Applicant’) under Section 30(6) of IBC, 2016, seeking the following reliefs:

“a) Approve the resolution plan of Kapivar & Ors. as approved by the CoC in its 8th meeting held on 26.04.2023, 01.05.2023 (adjourned 8th meeting of the CoC) and 03.05.2023 (further adjourned 8th meeting of the CoC) with 92.23% voting share of the CoC. b) Pass such other/further and other reliefs as this Hon’ble Court may deem fit and proper in the facts and circumstances of the instant case.”

2. To put the facts briefly, the underlying main Petition CP (IB)- 1095/ND/2020 was filed by M/s Pearson India Education Service Private Limited against the Corporate Debtor namely, M/s U.B.S Publishers Distributors Private Limited under Section 9 of IBC, 2016, which was admitted vide Order dated 21.10.2022 by this Adjudicating Authority. The Corporate Insolvency Resolution Process (CIRP) in respect of the Corporate Debtor was initiated and Mr. Ajay Gupta IP was appointed as IRP of the Corporate Debtor. It is submitted by the Applicant/RP that he was confirmed as the RP of the Corporate Debtor (CD) in the 01st meeting of the Committee of Creditors (CoC) held on 21.11.2022 with a 100% voting share, which was subsequently approved by this Adjudicating Authority on 23.03.2023.

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3. It is submitted by the Applicant that in terms of Regulation 6(1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the IRP effected a Public Announcement in Form - A by way of publications in Business Standard, Financial Express and Jansatta on 24.10.2022 and 02.11.2022 to invite claims. In response, the Applicant received various claims from Operational Creditors and no claim from any Financial Creditor.

4. Accordingly, as submitted by the Applicant, the Resolution Professional constituted a Committee of Creditors (CoC) comprising the following Operational Creditors:

,

The Applicant with the approval of CoC appointed the following registered valuers for the purpose of valuation of the assets of the Corporate Debtor.

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5. It is stated by the Applicant/RP that the ‘Form-G’ was published in the all-India editions of daily newspapers, namely, Financial Express (English) and Jansatta (Hindi) on 20.12.2022 and 26.01.2023. It is added that as per Form G, the last date for submission of Resolution Plans was 24.03.2023.

6. It is further stated by the Applicant that in response to the publication of the said two Form-G, 06 EOIs were received out of which 02 PRAs namely, Kapivar & Ors. and Fourth Dimension Solutions Ltd. submitted their Resolution Plans. The said Resolution Plans were duly deliberated upon by the CoC in the 06th meeting of CoC dated 04/10.04.2023.

7. It is submitted by the Applicant that after multiple negotiations between PRAs and CoC, the Resolution Plans were put to vote in the adjourned 08th CoC meeting held on 03.05.2023. The copy of the Resolutions placed before the CoC for voting are reproduced below:

xxxx xxxx xxxx xxxx xxxx

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8. E-voting summary records of the 08th CoC meeting, inter alia, covering voting on Resolution Plans is annexed by the Applicant on page no. 131 of the application. The voting results on relevant Resolutions B2 and B3 read thus:

On perusal of the voting sheet (ibid), it is observed that the Resolution Plan for the Corporate Debtor submitted by Kapivar & Ors. is approved by the CoC with 92.23% votes in its favour.

9. The details of the CIRP, fair value and liquidation value of the CD, the distribution of the resolution plan amount amongst the stakeholders, and compliances are given in the “Compliance Certificate” filed by the RP in Form ‘H’, which is reproduced overleaf for the purpose of immediate reference:

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10. As per the abovementioned Form ‘H’ filed by the Applicant on record, the Fair Market Value of the Corporate Debtor is Rs.2,65,58,000/- and its Liquidation Value is Rs.1,99,26,000/-. The total amount provided under the CoC-approved Resolution Plan is Rs.2,50,00,000/-, which is 4.07% of the admitted amount of claims and 128% of the Liquidation Value of the Corporate Debtor. Besides the SRA has estimated the CIRP cost to be of Rs.1,00,00,000/-which shall be met by the SRA.

11. The Applicant vide its additional Affidavit dated 30.05.2023 has also filed an Affidavit submitted by Sh. Sunil Gandhi Director of the Successful Resolution Applicant stating that the SRA is not barred under Section 29A of IBC 2016 to submit the Resolution Plan. The said Affidavit reads thus:

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12. The Applicant has further submitted that the Affidavit filed by the Sh. Sunil Gandhi is supported by the Power of Attorney dated 27.03.2023 given on behalf of the SRA and placed on pages 12 to 17 of the additional Affidavit.

13. As regards the Performance Bank Guarantee of the SRA, the Applicant/RP submitted that the SRA has deposited an amount of Rs. 25,00,000/- (10% of the Plan Value) by RTGS to the account No.0388261010043 of the Corporate Debtor maintained with Canara Bank Daryaganj Branch, a copy of which has been placed by the Applicant on page no. 418 of the application, and is reproduced thus:

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14. As regards the “Sources of Funds” and Financial Performance of the SRA, the Resolution Plan reads thus:

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15. On perusal of the Resolution Plan, it is seen that the Plan is proposed to be implemented within total of 225 days (Effective Date + 45 days + 06 months). The relevant provision in the Resolution Plan reads thus:

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16. The Resolution Plan provides for the setting up of a “Monitoring Committee” for the day-to-day management of affairs, supervision, and implementation of the Resolution Plan. The relevant provision reads thus:

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17. The role of the Adjudicating Authority, in the context of a Resolution Plan, has been examined by the Hon’ble Supreme Court in a catena of judgments. The relevant extracts of the Judgement of the Hon’ble Supreme Court in Civil Appeal No. 10673 of 2018 in the matter of “K. Sashidhar Vs. Indian Overseas Bank & Ors.” is reproduced below:

“35. Whereas, the discretion of the adjudicating authority (NCLT) is circumscribed by Section 31 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. Reverting to Section 30(2), the enquiry to be done is in respect of whether the resolution plan provides : (i) the payment of insolvency resolution process costs in a specified manner in priority to the repayment of other debts of the corporate debtor, (ii) the repayment of the debts of operational creditors in prescribed manner, (iii) the management of the affairs of the corporate debtor, (iv) the implementation and supervision of the resolution plan, (v) does not contravene any of the provisions of the law for the time being in force, (vi) conforms to such other requirements as may be specified by the Board. The Board referred to is established under Section 188 of the I&B Code.

The powers and functions of the Board have been delineated in Section 196 of the I&B Code. None of the specified functions of the Board, directly or indirectly, pertain to regulating the manner in which the financial IA. No. 2920/ND/2023 in (IB)-1095/(ND)/2020 creditors ought to or ought not to exercise their commercial wisdom during the voting on the resolution plan under Section 30(4) of the I&B Code. The subjective satisfaction of the financial creditors at the time of voting is bound to be a mixed baggage of variety of factors. To wit, the feasibility and viability of the proposed resolution plan and including their perceptions about the general capability of the resolution applicant to translate the projected plan into a reality. The resolution applicant may have given projections backed by normative data but still in the opinion of the dissenting financial creditors, it would not be free from being speculative. These aspects are completely within the domain of the financial creditors who are called upon to vote on the resolution plan under Section 30(4) of the I&B Code.” “38. Indubitably, the inquiry in such an appeal would be limited to the power exercisable by the resolution professional under Section 30(2) of the I&B Code or, at best, by the adjudicating authority (NCLT) under Section 31(2) read with 31(1) of the I&B Code.

No other inquiry would be permissible. Further, the jurisdiction bestowed upon the appellate authority (NCLAT) is also expressly circumscribed. It can examine the challenge only in relation to the grounds specified in Section 61(3) of the I&B Code, which is limited to matters “other than” enquiry into the autonomy or commercial wisdom of the dissenting financial creditors. Thus, the prescribed authorities (NCLT/NCLAT) have been endowed with limited jurisdiction as specified in the I & B Code and not to act as a court of equity or exercise plenary powers.” 18. In view of the Judgement (ibid), it is a well-settled principle of law that the Adjudicating Authority is not required to interfere with the decision taken by the CoC in its commercial wisdom, save and except the circumstances referred to in Section 30(2) of the IBC, 2016. In terms of the Compliance Certificate filed in Form-H by the Applicant/RP, the Resolution Plan is feasible

IA. No. 2920/ND/2023 in (IB)-1095/(ND)/2020 and viable and does not contravene any of the provisions of the law for the time being in force.

19. In the sequel to the above, we have no other option but to approve the Resolution Plan as approved by the CoC and as placed by the Applicant before this Adjudicating Authority. We, therefore, allow the present Application and approve the COC-approved Resolution Plan placed before us by the Applicant/RP with the following directions in respect of the Corporate Debtor:

(i) The Resolution Plan as annexed with COC approved addendums shall become effective from the date of passing of this Order and shall be implemented strictly as per the term of the plan and implementation schedule given therein;

(ii) The Performance Guarantee of Rs.25,00,000/- reported to have been deposited in the account of the Corporate Debtor shall be transferred and kept in a separate bank account to be opened in the name of “Monitoring Committee of the Corporate Debtor- “U.B.S. Publishers Distributions Pvt. Ltd.” till the Resolution Plan is fully implemented. In case of non-implementation of the Plan, the amount of the Performance Guarantee shall be forfeited.

(iii) The Monitoring Committee as provided in the Resolution Plan shall be set up by the Applicant/RP within 03 days of passing of this Order, which shall take all necessary steps for implementation and supervision of the Resolution Plan within the implementation period of 225 days and as per approval. IA. No. 2920/ND/2023 in (IB)-1095/(ND)/2020 (iv) The avoidance/PUFE application filed against the Corporate Debtor shall continue to be followed up and pursued by the Resolution Professional (RP), and Monitoring Committee.

(v) The order of the moratorium in respect to the corporate debtor passed by this Adjudicating Authority under Section 14 of the IBC, 2016 shall cease to have effect from the date of passing of this Order;

(vi) The CIRP cost estimated to be Rs.1,00,00,000/- shall be examined by IBBI with reference to Regulation 34B read with Schedule-II of the CIRP Regulation 2016 and the Outcome Report shall be filed with this Adjudicating Authority within 30 days. However, this in no way will delay the implementation of the Resolution Plan.

(vii) The Resolution Professional shall forward all the records relating to the conduct of the CIRP and the Resolution Plan to the IBBI for its record and database.

20. The Court Officer and Applicant/Resolution Professional shall forthwith send a copy of this Order to the CoC and the Successful Resolution Applicant for necessary compliance.

21. A copy of this order shall also be sent by the Court Officer and Applicant to the IBBI for their record.

Sd/- Sd/- s (L. N. GUPTA) (ASHOK KUMAR BHARDWAJ) MEMBER (T) MEMBER (J)

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