NCLT approves JK Paper’s resolution plan to revive Sirpur Paper Mills

The NCLT Hyderabad Bench on Thursday approved the resolution plan submitted by paper manufacturer JK Paper Ltd to take over the bankrupt Sirpur Paper Mills Ltd..According to a statement issued by Shardul Amarchand Mangaldas, the law firm which acted for JK Paper in the deal,.“This is amongst the first resolution plans to be approved by the National Company Law Tribunal, Hyderabad bench (NCLT) under the Insolvency and Bankruptcy Code, 2016 (IBC) in a record time of 50 days from the date of filing of the resolution plan.”.Insolvency proceedings against Sirpur Paper were triggered by an operational creditor, Rama Road Lines, in September 2017. Seven resolution applicants had expressed interest in the corporate debtor and only one resolution applicant, JK paper, submitted a resolution plan within the committee of creditors (CoC) prescribed timeline. The plan was subsequently revised more than once based on discussions with the CoC..The NCLT also granted a 90-day extension pushing the deadline for the resolution to Mid June 2018..The resolution plan submitted was conditional on obtaining certain concessions from the State of Telangana, which during the resolution period, was granted to JK Paper..JK Paper will be infusing a total of Rs. 782 crores of which Rs. 371 crores will be used for settling claims of nearly Rs. 674 crores. Around Rs. 400 crores will be used for revival and capacity augmentation of Sirpur Paper..The plan was approved by a vote of 80.66% of the CoC which comprised of IDBI Bank, State Bank of India, Central Bank of India, Andhra Bank and Syndicate Bank..However, some of the rejected claims were disputed at the NCLT approval stage. Rejected claims were disputed by an employee Veda Kumar Nimbagal, and by three other by operational creditors, Inox Air Products Pvt Ltd., FLSmidth Pvt Ltd., and Rama Road Lines..Only some of these admitted by the NCLT as being bona fide. The claim filed by Rama Road against the new resolution professional was for making a public announcement and interim resolution professional fees for the first 30 days. The NCLT upheld the validity of these claims..Shardul Amarchand Mangaldas advised JK Paper on all aspects of the corporate insolvency resolution process..The corporate insolvency resolution advisory and transaction team was led by Shardul Shroff, Executive Chairman; the real estate team advising on property law aspects and other regulatory matters was led by Mrinal Kumar, Partner; the litigation team handling the court-process in relation to the corporate insolvency resolution process before the NCLT was led by Misha, Partner and Ameya Gokhale, Partner; the competition team advised the resolution applicant on notifiability of the transaction and was led by Shweta Shroff Chopra, Partner..(Read the order)