NCLT Principal Bench passes first resolution plan under Insolvency Code

The Principal Bench of the National Company Law Tribunal (NCLT) has admitted the first resolution plan filed before it, and the first to have been submitted following the passage of the Insolvency Ordinance..This resolution plan, however, faced severe retaliation from the erstwhile management of corporate debtor, Hotel Gaudavan Pvt. Ltd (HGPL). The application filed under Section 7 of the Insolvency and Bankruptcy Code 2016, by Alchemist Asset Reconstruction Company Limited, was admitted on March 31 this year and had reached the Supreme Court as well, after the erstwhile management violated the moratorium order..Upon admission, HGPL (through its erstwhile directors) filed a writ petition before the Rajasthan High Court, where, although the petition was admitted, the stay on moratorium was rejected. Following this, unsuccessful attempts at stalling the proceedings were made by HGPL in the Supreme Court and the NCLAT..After a failed effort at the Supreme Court and during the pendency of the moratorium, the erstwhile directors of HGPL invoked an arbitration clause and filed an appeal before the District Court of Jaisalmer under Section 37 of the Arbitration and Conciliation Act, 1996. The District Court issued notice, which was later challenged in the Supreme Court by Alchemist..Meanwhile, the erstwhile directors of HGPL refused to comply with the NCLT moratorium order and a contempt petition was filed, in which an adverse order was also passed. To further stall the resolution process, the erstwhile directors also registered FIRs against the Resolution Professional and the officials of Alchemist..Alchemist, along with the Resolution Professional, later challenged the arbitration proceedings and the FIRs filed against them in the Supreme Court. The Court quashed the same in a verdict commencing with the following:.“The facts of the present case disclose a very sorry state of affairs”.Taking note of the Supreme Court oder, the NCLAT dismissed the appeals pending before it..Even at the stage of finalisation of the resolution plan, the erstwhile directors sought to oppose the approval by NCLT on several grounds, to no avail..Then, the NCLT, by an order dated December 13, approved the resolution plan submitted by one of the financial creditors, JFC Finance (India) Limited..As a part of the approved resolution plan:.The shares held by existing shareholders of HGPL will be transferred to JFC for a consideration of Rs. 1 per share, for a total consideration of Rs. 1738.83 lakhs;Fresh capital infusion by JFC to the tune of Rs. 500 lakhs for which further 50 lakh shares of Rs. 10 each will be issuedAlchemist will convert a part of its debt (Rs. 100 crore) into equity and a part of it (Rs. 150 crore) will be converted into interest-free CCDs with Rs. 500 lakh payment upfront and balance debt clearance by 31 March 2018;Existing three directors will be removed and three new directors will be appointed as recommended in the resolution plan;Government of Rajasthan to extend the lease period of the land for Hotel Fort Rajwada as per the terms of lease deed; and.Abhirup Dasgupta and Swati Sharma appeared for Alchemist, Krishnendu Datta and Ashu Kansal appeared for the Resolution Professional, and Siddharth Chaudhary appeared for HGPL..Read the order: