NCLT Approves Reliance Big Resolution Plan with 100% CoC Vote, Upholding Commercial Wisdom Principle under IBC S.30(6)

Reliance Big Resolution Plan Gets Green Light from NCLT, Marking Successful CIRP Conclusion

Mumbai, India – The National Company Law Tribunal (NCLT), Mumbai Bench, has approved the resolution plan for Reliance Big Private Limited, a wind energy generator, paving the way for the company's revival under new ownership. The approval, granted on February 18, 2024, comes after the Committee of Creditors (CoC) unanimously voted in favor of the plan submitted by Successful Resolution Applicant (SRA) Manoj Kumar Upadhyay .

The bench, comprising Shri. Prabhat Kumar (Hon’ble Member - Technical) and Justice V. G Bisht (Hon’ble Member - Judicial), delivered the order in CP(IB) No. 845 (MB) of 2022, effectively concluding the Corporate Insolvency Resolution Process (CIRP) initiated against Reliance Big.

Case Background and CIRP Journey

Reliance Big Private Limited, admitted into CIRP on August 18, 2023, following a default on debenture security cover maintenance, owns a wind energy generator in Tamil Nadu and land parcels. Resolution Professional (RP) Rohit Ramesh Mehra was appointed to manage the CIRP. The process included public announcement, creditor claim collation, CoC formation, and invitation for resolution plans.

Seven Prospective Resolution Applicants (PRAs) initially expressed interest. Ultimately, only Mr. Manoj Kumar Upadhyay submitted a resolution plan. After revisions and clarifications sought by the CoC, the final plan, along with an addendum, was approved with a 100% majority vote by the CoC.

Key Features of the Approved Resolution Plan

The resolution plan, valued at ₹351 Lakhs, outlines a comprehensive strategy for the corporate debtor's revival. Key features include:

• Financial Commitment: An upfront cash infusion of ₹4 Crore by the SRA to cover CIRP costs, operational creditor debts, and implementation expenses.
• Creditor Settlement: Operational creditors will receive ₹0.50 Lakhs, while secured financial creditors are slated to receive ₹350 Lakhs through non-convertible debentures, which will eventually be converted into equity. Unsecured financial creditors, deemed related parties, will receive a nominal ₹1.
• Distribution Ratio: Secured financial creditor, Axis Trustee Services Limited, and unsecured financial creditor, J.C. Flowers Asset Reconstruction Private Limited, will share the resolution amount in a 92:08 ratio.
• Implementation Structure: Initially proposed through MKU Holdings Private Limited, the plan will now be implemented via ACME Cleantech Solutions Private Limited, an affiliate of the SRA, a change approved by the CoC and deemed permissible under the Request for Resolution Plans (RFRP) terms.
• Reliefs and Concessions: The SRA sought various reliefs, including waivers on taxes, fees, and permits, which the NCLT addressed in line with the Supreme Court's Ghanshyam Mishra judgment, clarifying they are subject to relevant laws and authorities' approvals.

NCLT's Rationale and Adherence to Precedents

The NCLT emphasized its limited scope of judicial intervention in resolution plan approvals, citing the Supreme Court's ruling in K. Sashidhar v. Indian Overseas Bank & Others . The tribunal reiterated that its purview is primarily to ensure the resolution plan adheres to Section 30(2) of the IBC and is compliant with Section 29A concerning applicant eligibility.

The order highlights that the CoC, exercising its commercial wisdom with a 100% vote, found the resolution plan viable and feasible. The NCLT concurred, noting the plan's compliance with all statutory requirements of the IBC and related regulations.

> "This Bench observes in the present application that the CoC with requisite majority has approved to the Resolution Plan in the 13th CoC meeting and the Addendum to the Resolution Plan in the 17th CoC meeting with 100% voting share respectively, hence as per the CoC, the plan meets the requirements of being viable and feasible for the reviving the Corporate Debtor."

Regarding the change in implementing entity, the NCLT accepted the SRA's clarification and CoC's approval, referencing clauses within the RFRP and Resolution Plan allowing for implementation through affiliates. The tribunal distinguished the case from instances where the SRA itself was sought to be substituted, confirming that only the implementing structure was being modified.

Implications and Next Steps

With the NCLT's approval, the resolution plan becomes binding on all stakeholders, including creditors, employees, and governmental authorities. The moratorium under Section 14 of the IBC is lifted. The Resolution Professional is tasked with supervising plan implementation and providing quarterly status updates to the NCLT.

This approval marks a significant step towards the revival of Reliance Big Private Limited and underscores the efficacy of the IBC framework in resolving corporate insolvency through a creditor-driven resolution process.