15 November, 2017
Three resolution plans have recently been approved by different benches of the National Company Law Tribunal (‘NCLT’) under the provisions of the Insolvency and Bankruptcy Code, 2016. These three cases are briefly discussed below:
Sree Metaliks Limited
The NCLT, Kolkata Bench on November 7, 2017, approved the resolution plan proposed by the promoters and approved by the Committee of Creditors (‘CoC’) by a 78.5% majority. The plan inter alia provides for:
- division of financial creditors (‘FC’) into two buckets (Class A and Class B) based on the different levels of charge created by the company;
- haircut of 25% for Class A FCs and 50% for Class B FCs; and
- capital infusion by a strategic investor.
Prowess International Private Limited
An operational creditor (‘OC’) had initiated the corporate insolvency resolution process (‘CIRP’) at the NCLT, Kolkata Bench, against a company which was solvent and financially sound. During the CIRP, two OCs which had a major claim against the company settled their dues by way of a compromise. The resolution plan, approved by the NCLT on October 17, 2017, provided for:
payment to the sole FC without any haircut; and
payment to OCs (other than the two whose claims were settled) without any haircut during normal course of business.
Chhaparia Industries Private Limited
The NCLT, Mumbai Bench on September 29, 2017 approved the resolution plan proposed by the promoters. The order passed by the NCLT does not discuss the commercials in depth. However, the plan provides for:
- reinstatement of the suspended board of directors;
- payment of liquidation value to OCs (of which part payment had already been made and the remainder was to be paid within 30 days); and
- payment to the sole FC, Asset Care and Reconstruction Enterprises Limited within 25 months from the date of the order. It is not clear if the FC suffered a haircut, if any.
The common theme amongst all of the above cases has been that the plan proposed by the erstwhile promoters has been approved by the CoC and NCLT.
For further information, please contact:
Bahram Vakil, Partner, AZB & Partners
bahram.n.vakil@azbpartners.com
