Event Date: N/A
Ajay Gupta, Resolution Professional for Autopal Industries Limited, provides an update to the Bombay Stock Exchange (BSE) regarding the approval of the resolution plan by the Hon'ble National Company Law Tribunal (NCLT) Hyderabad Bench. This communication, dated September 24, 2024, references disclosures pursuant to Regulation 30(2) (Schedule III Part A) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The Hon'ble NCLT-Jaipur Bench pronounced Orders on September 23rd, 2024, approving the resolution plan submitted jointly by Mr. Vivek Kumar Ratakonda & Mr. Raja Srinivas Nandigam in the matter of M/s. Track Innovations V/s. Autopal Industries Limited. This includes the addendum, annexure, schedules and Scheme of Arrangement forming part of the Resolution Plan. The Hon'ble Tribunal also approved the Scheme of Arrangement for the merger of M/s. RNIT Solutions & Services Limited into Autopal Industries Limited, forming part of the Resolution Plan. The silent features of merger shall be updated shortly.
IA No. 384/JPR/2024
The National Company Law Tribunal (NCLT) Jaipur Bench heard the matter of M/S Tack Innovations (Operational Creditor) versus M/S Autopal Industries Limited (Corporate Debtor). The coram consisted of Shri Deep Chandra Joshi (Judicial Member) and Shri Rajeev Mehrotra (Technical Member). IA No. 384/JPR/2024 was filed by Mr. Ajay Gupta, Resolution Professional of M/s Autopal Industries Limited, under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 ('IBC') read with rule 11 of the National Company Law Tribunal Rules, 2016 ('NCLT Rules') seeking exclusion of 431 days from the Corporate Insolvency Resolution Process ('CIRP'). M/s Tack Innovations had filed the initial application, which led to Mr. Ajay Gupta being appointed as Interim Resolution Professional ('IRP') on August 16, 2022. The applicant submitted that a crucial time-period was lost due to the indecisiveness of the CoC member holding the majority voting rights regarding the Resolution Plan. The majority stakeholder in the CoC expressed their assent via email dated 01.07.2024, to make efforts for the resolution of the Corporate Debtor by providing opportunities to the existing PRAs. Subsequently, with the consent of the CoC members, the Applicant informed the existing PRAs to submit their Resolution Plans by 12.07.2024. The Applicant scheduled the 11th CoC meeting (subject to the grant of exclusion of the time by this Tribunal) on 03.07.2024, wherein sought exclusion of 431 days (from 24.04.2023 till 28.06.2024) from the total CIRP period.
The bench considered the judgement in Mr. Ravi Shankar Deverakonda Vs Committee of Creditors of Meenakshi Energy Limited (2021) wherein Hon'ble NCLAT held that the exercise of power by the Adjudicating Authority to extend the time period under section 12(3) of the Code in negation of statutory provision of the Code may be desirable in an exceptional/extraordinary circumstances by exercising sound judicial discretion with a view to find a suitable Resolution Plan to prevent an aberration of justice.
The Tribunal noted that Application IA (IBC) Plan No. 07/JPR/2024 for approval of the Resolution Plan was filed on 26.08.2024 and is pending adjudication. The bench allowed IA No. 384/JPR/2024 for exclusion of 431 days from the CIRP period, disposing of it as allowed.
IA (IBC) Plan No.07/JPR/2024
This application bearing IA (IBC) Plan No.07/JPR/2024 was filed by Mr. Ajay Gupta, Resolution Professional of M/s Autopal Industries Limited, under Section 30(6) and Section 31 of the Insolvency and Bankruptcy Code, 2016 read with Regulation 39(4) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 seeking approval of a Resolution Plan envisaging a Scheme of Arrangement. The Adjudicating Authority had admitted the Application filed by M/s Tack Innovations for initiation of Corporate Insolvency Resolution Process ('CIRP') of the Corporate Debtor and appointed Mr. Ajay Gupta, as Interim Resolution Professional ('IRP') vide Order dated 16.08.2022. The IRP issued a public announcement on 28.08.2022, calling upon the creditors/stakeholders of the Corporate Debtor to submit their claims. Initially, only M/S Reliance Commercial Finance Limited and Bhagwant Singh Solanki submitted their claims.
The Committee of Creditors ('CoC') was constituted, comprising these financial creditors. In the first CoC meeting held on 24.09.2022, the IRP Mr. Ajay Gupta was appointed as the Resolution Professional. The Resolution Professional received another claim from M/S Paisalo Digital Limited. The claims of Reliance and Paisalo were based on an Arbitral Award and categorized as 'Other Creditors,' leading to an application by the Resolution Professional for clarification. The Adjudicating Authority directed that Reliance and Paisalo be included as Financial Creditors.
The Applicant reconstituted the CoC, with Reliance Commercial Finance Ltd. (now Authum Investment) holding a 64.20% voting share, Bhagwat Singh Solanki (through legal heirs) holding 15.06%, and Paisalo Digital Ltd. holding 20.74%. The Applicant appointed Registered Valuers to determine the fair value and liquidation value of the Corporate Debtor. These included M/s Value Edge Professionals Pvt. Ltd., M.s GN Fair Valuation Pvt. Ltd., and Mr. Gyaneshwar Sahai. Additionally, eligibility criteria were prepared for Prospective Resolution Applicants ('PRAs'), which were approved by the 2nd CoC Meeting.
The Applicant received 11 EOIs and issued the Request for Resolution Plan (RERP) documents, evaluation matrix, and Information Memorandum (IM) to the eligible PRAs. The deadline for submission of resolution plans was extended to 06.01.2023. The Applicant received three resolution plans by the submission deadline of 06.01.2023. However, these plans could not be presented to the Committee of Creditors (CoC) until 22.02.2023, due to the demise of Mr. Bhagwant Singh Solanki. The Tribunal directed the Applicant to classify the claims of Reliance and Paisalo as financial creditors. Subsequently, the CoC was reconstituted, and an addendum to the Information Memorandum was issued. Revised resolution plans were submitted by Mr. Vivek Kumar Ratakonda and Masatya Technologies Private Limited.
The resolution plan from the PRAs was placed for consideration and voting in the 7th COC meeting, which failed to obtain the requisite voting shares. The Applicant filed an application seeking directions against the CoC members and convened a CoC meeting within 15 days. The 10th CoC meeting was held on 14.06.2024, but was attended by only one CoC member. Both existing PRAs confirmed they would submit revised plans. Reliance Commercial Finance Ltd. expressed its assent to make attempts to resolve the issues of the Corporate Debtor by providing opportunities to the existing PRAs.
The 11th meeting of the CoC was held on 03.07.2024, and the CoC was willing to consider revised resolution plans that could be submitted by the PRAs by 12.07.2024. Masatya Technologies Private Limited submitted its Earnest Money Deposit (EMD) via a post-dated cheque, but later withdrew their proposal. The cheque from Masatya Technologies Private Limited could not be encashed. The only plan left for consideration was that submitted by Mr. Vivek Kumar Ratakonda, jointly with Mr. Raja Srinivas Nandigam. A revised plan was submitted and approved by the CoC with 100% voting share on 05.08.2024.
The Applicant issued a Letter of Intent (LOI) to the resolution applicants on 16.08.2024, which has been unconditionally accepted by them. The resolution applicant have provided a Performance Bank Guarantee of Rs. 12,70,000, representing 10% of the resolution plan amount.
The resolution applicant proposes a Scheme of Arrangement involving the merger of M/s RNIT Solution & Services Limited with and into the Corporate Debtor, M/s Autopal Industries Limited. The Scheme complies with the provisions of Section 2(19AA) of the Income Tax Act, 1961. Key elements of the restructuring include:
The proposed shareholding of the Corporate Debtor post CIRP involves changes across Promotor, Public Shareholders, Resolution Applicants, and Shares allotted to the Shareholders of RNIT Solutions & Services Ltd. Total shares are projected at 8,47,91,983, with 100% ownership.
The Resolution Applicant(s) contemplate shifting the corporate debtor's registered office from Rajasthan to Telangana. Amendments are contemplated to the Memorandum of Association (MOA) and Articles of Association (AOA). The Applicant submitted the Resolution Plan dated 01.08.2024 along with a compliance certificate in Form-H dated 26.08.2024.
The Applicant filed its Additional Affidavit providing clarifications sought by the Tribunal on aspects of the resolution plan.
The Corporate Debtor was incorporated on 15.10.1985, and CIRP proceedings were initiated under Section 9 of the Code on 16.08.2022. The present application is for approval of the resolution plan submitted by Mr. Vivek Kumar Ratakonda and Mr. Raja Srinivas Nandigam.
The Adjudicating Authority, after considering all aspects, observed that the Resolution Plan had been approved by a vote of 100% of the voting share of the CoC members and also meets requirements as referred to in Section 30(2) of the Code and has provisions for its effective implementation.
The Resolution Plan submitted by Mr. Vivek Kumar Ratakonda and Mr. Raja Srinivas Nandigam is approved. The moratorium order passed by the Adjudicating Authority under Section 14 of the Code on 16.08.2022 shall cease to have effect. The RP shall forward all records relating to the conduct of the CIRP and the Resolution Plan to the Board. The Edelweiss Asset Reconstruction Company Ltd. v/s Synergies Dooray Automotive Ltd. ruling regarding mergers and amalgamations in resolution plans was cited.
The Tribunal directed that the resolution applicant could take necessary steps in respect of the said claims of reliefs and concessions and the public authorities, government authorities/ tax departments would duly consider the said request/ application of the Resolution Applicant and take appropriate decision in accordance with law. IA (IBC) Plan No.07/JPR/2024 is disposed off.
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