December 22, 2021
The RP of F.M. Hammerle Textiles Ltd. (CD) filed this application under Section 30(6) of the Code, seeking approval of the resolution plan and of the amendment filed by M/s. New Ram Traders (RA).
The CD had applied for initiation of CIRP under Section 10, which was initiated by an order dated 27 June 2017. Subsequently, the RP was appointed, who invited resolution plans for the distressed CD through an invitation of Expression of Interest. The RP received resolution plans from two prospective resolution applicants. The CoC, comprising the State Bank of India as its sole member, approved the resolution plan submitted by M/s. New Ram Traders in its 8th meeting, dated 15 March 2018; and the same was submitted before the NCLT’s Chandigarh Bench for its approval through C.A. No. 97/2018. However, the NCLAT reconstituted the CoC through its order dated 4 May 2018, and added Andhra Bank as a member. The NCLAT directed the RP to place the RA’s approved resolution plan before the reconstituted CoC, but gave Andhra Bank the power to object only if the plan was not in compliance with Section 30(2) of the Code.
The RP subsequently admitted claims of the Corporate Guarantee Holders of the CD, and reconstituted the CoC by inducting the guarantee holders as new members. The reconstituted CoC then went through several rounds of negotiations, and deliberated on multiple revisions of the resolution plan. However, in its 16th meeting dated 23 September 2019, the CoC approved the revised resolution plan submitted by the RA on 25 January 2018 (along with an amendment to it dated 18 September 2019). This application was then filed seeking approval of the resolution plan and of the amendment.
The Tribunal examined whether the conditions for approval of the resolution plan under Section 31(1) had been fulfilled. Upon satisfaction, the Tribunal commented that the decision taken by the financial creditors fell within the ambit of its commercial and banking wisdom, and was therefore not being interfered with (Para 43). Accordingly, the application was allowed, and the resolution plan was approved.
Full text of the order accessible here.
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