NCLT Kolkata Directs CoC to Re-Vote On Promoter's Rejected Resolution Plan Due To Enhanced Plan Value

NCLT Kolkata Directs CoC to Re-Vote On Promoter's Rejected Resolution Plan Due To Enhanced Plan Value

The Kolkata Bench of the National Company Law Tribunal (NCLT), comprising Smt. Bidisha Banerjee (Judicial Member) and Shri Arvind Devanathan (Technical Member), has directed the Committee of Creditors (CoC) of Simplex Projects Limited (Corporate Debtor) to conduct a re-vote on the resolution plan proposed by the promoter. This directive follows the promoter's enhancement of the plan value by submitting addendums. The addendums have elevated the value of the resolution plan to over Rs. 228 Crores, exceeding eight times the liquidation value of Rs. 26 Crores.

The Bench has additionally extended the Corporate Insolvency Resolution Process (CIRP) period by a further 30 days beyond the expiration of the initial 330 days. This extension aligns with the principle of maximizing value as outlined in the Insolvency and Bankruptcy Code (IBC).

The directive was issued while an application seeking the liquidation of the corporate debtor was pending, as filed by the resolution professional.

The corporate debtor Simplex Projects Limited was admitted into CIRP by the NCLT on 27.04.2022.

Two resolution applicants submitted resolution plans for the corporate debtor to the resolution professional, one of whom was the promoter of the corporate debtor, meeting the eligibility criteria under Section 240A and Section 29A of the Insolvency and Bankruptcy Code (IBC). However, when both resolution plans were presented before the CoC for voting, none of the plans received the requisite majority of votes of 66%, as mandated under Section 30(4) of the IBC read with Regulation 39 of the Insolvency Resolution Process for Corporate Persons Regulations, 2016 (CIRP Regulations).

The proviso to Regulation 39(3B) of the CIRP Regulations stipulates that if none of the resolution plans receives the required votes, the Committee shall conduct a subsequent vote on the resolution plan that obtained the highest votes initially, subject to the timelines prescribed under the Code.

Therefore, the resolution plan presented by the promoter, which secured the highest vote in the initial round although did not reach the 66% threshold, underwent a re-voting process. However, even in the subsequent vote, the promoter's plan failed to secure the necessary 66% majority votes.

Following this, the Resolution Professional filled an application with the NCLT requesting the liquidation of the corporate debtor due to the expiration of the CIRP beyond the 330-day time period.

While the application for liquidation was under consideration, the promoter, in an unsolicited manner, submitted two addendums to the previously proposed resolution plan. These addendums substantially augmented the value of the resolution plan to over Rs. 228 Crores, a figure exceeding eight times the liquidation value of Rs. 26 Crores.

The promoter filed a plea with the NCLT, requesting the withdrawal of the liquidation application and urging the CoC to conduct a fresh vote on the resolution plan, inclusive of the addendums. Additionally, the applicant sought an extension of the CIRP by 30 days to facilitate the CoC's evaluation of the revised plan alongside the addendums.

The promoter contended that resorting to liquidation should be considered only as a last resort, highlighting that the revised addendums offer a value surpassing eight times the estimated liquidation value of the corporate debtor.

The Bench observed that, in consideration of maximizing value, additional time must be allotted to the Resolution Professional and the CoC to evaluate the addendums submitted by the Promoter.

Accordingly, the Bench directed the CoC to re-vote on the resolution plan submitted by the promoter after considering the two addendums submitted by the promoter. Additionally, the Bench extended the CIRP of the corporate debtor by 30 days, allowing the resolution professional to complete the CIRP process within this period.