India: Are You Late In Submitting Your Resolution Plan? Not Really!

Last Updated: 11 May 2018
Article by Ashish Kabra and Mohammad Kamran

The Principal Bench of the National Company Law Tribunal ("NCLT / Tribunal") has directed the resolution professional ("RP") and committee of creditors ("CoC") of Bhushan Power and Steel Limited ("Company / BPSL") to consider the resolution plan submitted by Liberty House Group Pte. Ltd. ("Liberty House"). The CoC had earlier refused to entertain the resolution plan submitted by Liberty House on the ground that it was submitted after the last date of submission.


Brief Facts

The NCLT on July 26, 2017 admitted the petition filed by Punjab National Bank against BPSL under section 7 of Insolvency and Bankruptcy Code, 2016 ("Code") for initiating Corporate Insolvency Resolution Process ("CIR Process") owing to a default in payment of more than INR 4,000 Crores of financial debt.

A snapshot of key dates and events in the CIR Process is provided herein below:

Date Event
26 July 2017 Petition under Section 7 of the Code admitted against the BPSL.
28 July 2017 Public Announcement was uploaded on the website of the Company and published in newspapers.
9 August 2017 Last date for submission of proof of claims.
1 September 2017 First meeting of CoC
21 September 2017 Public Notice inviting "Expression of Interest / EOI" was published in the Economic Times (All India Edition).
6 October 2017 Last date for submission of EOI i.e. relevant documents by potential applicants to establish qualification requirements.
30 October 2017 Information Memorandum was prepared by the RP as required under Section 29 of the Code.
13 November 2017 Liberty House sent its formal Expression of Interest dated November 11, 2017 along with email dated November 13, 2017.
17 November 2017 Meeting of CoC whereby it authorised Resolution Professional to issue process document setting out the deadline, process and criterion for submission of resolution plans

Pertinently, process document which also contained deadline for submission of resolution plans was only shared with resolution applicants who submitted their EOIs and other documents to establishing their eligibility in time. It was not shared with Liberty House.
23 November 2017 The Code was amended by way of Ordinance which was later confirmed by the parliament through Insolvency and Bankruptcy Code (Amendment) Act, 2017 dated January 18, 2018.
1 January 2018 Last date for submission of Resolution Plan fixed by CoC
3 January 2018 Last date for submission of Resolution Plan was revised to January 28, 2018.
26 January 2018 Last date for submission of Resolution Plan was further revised to February 8, 2018.
8 February 2018 Last date for submission of Resolution Plan. Resolution Plan submitted within time by the resolution applicants were opened by the RP.
13 February 2018 Liberty House asserted that it was interested in submitting a resolution plan. It however, did not seek a copy of the process document.
14 February 2018 The resolution plans which were submitted within time by resolution applicant were opened on February 8, 2018 and the financial proposal was shared with the CoC.
20 February 2018 Liberty House submitted its resolution plan.
22 February 2018 Meeting of CoC convened for considering the resolution plans. In this meeting the CoC refused to open the resolution plan submitted by Liberty House on account of its delayed submission.

In the present case, Liberty House clearly missed two deadlines. One for submission of Expression of Interest ("EoI") and other for submission of resolution plan. It conveyed its expression of interest by its email of November 13, 2017 which was more than a month after the last date for submitting EoI. Further, it submitted its resolution plan on February 20, 2018 which was twelve days after the last date for submission of the resolution plan.

Consequently, the CoC in its meeting, refused to consider the resolution plan submitted by Liberty House on account of delay. Liberty House therefore, approached the NCLT under Section 60(5)(c) of the Code to seek appropriate orders against the CoC and RP. CoC and RP contested Liberty House's application. The application was also contested by another resolution applicant, namely, Tata Steel Limited ("TSL").

Concurrent changes in law

During the CIR Process, certain amendments were made to the Code in November 2017 and IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations") in October, November and December 2017. The provisions relevant to the facts of the present case are Section 12, Section 25(2)(h), Section 29A of the Code and Regulation 38 and Regulation 39 of CIRP Regulations.

Section 12

Section 12 entails that CIR Process shall be completed within a period of one hundred and eighty (180) days from the date of admission of the application, with an extension of ninety (90) days, if approved by the CoC and Adjudicating Authority i.e. NCLT.

Section 25(2)(h)

Section 25(2)(h) provided that the resolution professional shall undertake to (inter-alia), "invite prospective lenders, investors and any other persons to put forward resolution plans." However, after the amendment, it provides that the resolution professional shall undertake to (inter-alia), "invite prospective resolution applicants, who fulfil such criteria as may be laid down by him with the approval of committee of creditors, having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions as may be specified by the Board, to submit a resolution plan or plans."

It is pertinent to note that the notice inviting EoI was published prior to the amendments.

Section 29A

The amendments also introduced Section 29A in the code. This provision prohibited certain classes of identified persons or any other person acting jointly with such person or the promoter or any person in management of such person from submitting the resolution plan. On account of this insertion, the RP asked Liberty House to furnish an affidavit in compliance of the new Section 29A and the time limit for furnishing such affidavit was also extended till December 18, 2017. However, no affidavit was furnished by Liberty House.

Regulation 38

Regulation 38 of the CIRP Regulations provides for mandatory contents of a resolution plan. After the amendment, sub-clause (3) was inserted in Regulation 38, which required a resolution plan to also disclose details regarding resolution applicant. On account of this insertion, the RP sought an affidavit in compliance of the new Regulation 38(3) also.

Regulation 39

Prior to its amendment in December 2017, Regulation 39 of the CIRP Regulations provided that "a resolution applicant shall endeavour to submit a resolution plan prepared in accordance with the Code and these Regulations to the resolution professional, thirty days before expiry of the maximum period permitted under section 12 for the completion of the corporate insolvency resolution process."

However, it was later amended to state that, "a resolution applicant shall submit resolution plan(s) prepared in accordance with the Code and these regulations to the resolution professional within the time given in the invitation made under clause (h) of sub-section (2) of section 25."

Thus, when the notice under Section 25(2)(h) was issued by the RP there was no statutory requirement to submit the resolution plan within the time given in such invitation. A resolution applicant was only required to submit the plan 30 days prior to the end of insolvency period i.e. on 150th / 240th day of the CIR Process as per Regulation 39 of CIRP Regulations.

NCLT Judgment

The Tribunal held that the amended provisions would not apply to the facts and circumstances of the present case as the public advertisement inviting expression of interest was made much prior to the amendments. The Tribunal held that Section 12 provides the time limit for completion of CIR Process to be 180 days and if extended 270 days. While Regulation 39, as it stood prior to amendment, postulated that resolution applicant shall endeavour to submit resolution plan 30 days before the expiry of maximum period permitted under Section 12. The CIR Process in the present case was coming to end only on April 22, 2018. Thus, the time limit for submission of resolution plan would be till March 2018. Accordingly, Liberty House was well within time to submit its resolution plan on February 20, 2018.

It is only when the amended Section 25(2)(h) and Regulation 39 apply to CIR Process that the timelines prescribed by the RP and CoC shall be sacrosanct. The Tribunal noted that after the amendments, the RP had not issued any other public notice notifying the criteria which might have been laid down by the CoC. Thus, if no new public notice in terms of the amendment was issued, then the original public notice would prevail that was issued under the erstwhile regime. Under such regime, a resolution plan could have been submitted 30 days prior to end of insolvency period. The Tribunal thus, directed to the RP and the CoC to consider the resolution plan of Liberty House and not reject it on the ground of delay.

Separately, the Tribunal also ruled that the time period of litigation shall be excluded from the 180/270 days prescribed for completion of CIR Process.

Conclusion

Interestingly, in a different case of Binani Cements, a bidder Ultratech Cement Limited increased its bid after a competitor Dalmia Bharat Cements turned out to be the top bidder. UltraTech Cement had first given its plan on February 22, 2018 and revised its offer to beat Dalmia Bharat on March 8, 2018. This was within the stipulated 240 days, i.e. 30 days before the end of insolvency period as per the unamended Regulation 39. Reports suggests that Ultratech appealed the authorities stating that its situation was no different from Liberty House where its second bid was submitted well within the timeline.

While the Code is grappling with initial teething issues, amendments are constantly made to ensure there are no slips between the cup and the lip. A question thus arises as to how far such amendments can apply to on-going CIR Processes. Some newly inserted provisions like Section 29A of the Code, Regulation 36A, 39(4) of CIRP Regulations provides for certain conditions in which those provisions will apply to on-going cases. However, it will now have to be seen whether issuance of fresh public notices would allow application of the amended regulations to resolution process which commenced prior to the amendments. The present judgment seems to suggest that and allows parties to submit their resolution plans within 150th/240th day as opposed to timelines stipulated by RPs in cases where no fresh public notices was issued post amendments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Ashish Kabra
Mohammad Kamran
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions