INSOLVENCY CASE – Synergies-Dooray Automotive

Facts of the Case

The tribunal vide its order dated 23rd Jan 2017 admitted the petition filed by the corporate debtor
seeking initiation of the Corporate Insolvency Resolution Process, under sec 10 of the IBC, to appoint
Applicant herein as the Interim Resolution professional (IRP). As per section 12 of the IBC, the CIRP
period ends on 21st July 2017 (180 days).

The first meeting of the Committee of Creditors was called on 22nd February 2017, on which date, the
Applicant herein was confirmed as the Resolution Professional (RP) of the Corporate Debtor.

Applicant had duly filed the list of Committee of Creditors, which has been updated from time to time
after verification, it was placed on record of this Tribunal on 30th May 2017.

As per requirements of sec 25(2)(h) of the IBC, the Applicant herein initiated the process of inviting
prospective Resolution Applicants for submission of Resolution Plans for the resolution of the Corporate
Debtor. Based on this following entity sent Resolution Plans

SMB Ashes Industries.

Synergies Casting Limited.

Suiyas Industries Private Limited.

At the 2nd meeting of Committee of Creditors held on 24th June 2017, the resolution plans submitted
by SMB Ashes Industries and Suiyas Industries Private Ltd., placed before the meeting held on 24th June
2017 was unanimously rejected by the Members of the Committee of Creditors. However, Resolution
Plan submitted by Synergies Casting Ltd. (SCL) was approved by majority vote of 90.16% (EARC
abstained from voting), with certain modifications (duly reflected in the minutes) and the above item
was declared as approved/passed by the requisite majority by Applicant herein.

So, the instant Application is being moved for submission of Resolution Plan under section 30(6) of the
IBC and for approval under Section 31(1) of the IBC.

Therefore, as per Resolution Plan there will be Amalgamation of Synergies Dooray Ltd-Corporate Debtor
with Synergies Castings Ltd- Applicant. And based on the resolution plan various major
reliefs/concessions are given to SDAL
Corporate Debtor: Synergies-Dooray Automotive Ltd

Applicant/Resolution Professional: Mamta Binani

Respondents

Edelweiss Asset Reconstruction Company Ltd. (EARCL)

Millennium Finance Ltd

Synergies Casting Ltd

Alchemist Asset Reconstruction Company Ltd

Synergies Dooray Automotive Ltd.(SDAL)

Date of Judgement/Order: 2nd August, 2017 Courts: NCLT Hyderabad

Issue

EARCL had filed an objection dated 10th July 2017, stating that Millennium Finance Ltd was wrongly
included in the committee of creditors and that it was a related party and the approved resolution plan
is in contravention of provisions of IBC, 2016. Is this objection valid to hold grounds for rejection of the
resolution plan?

Decision

The resolution professional has certified that the approved resolution plan is not in contravention of
provisions of any law for time being in force and it has complied with all statutory provisions as
mandated under section 31 and section 32 of the IBC, 2016.

The three Assignment Agreements commonly dated 24.11.2016, through which SCL has assigned its
accrued rights to MFL, which is alleged to be a related party issue etc., it is stated that those issues have
already raised by EARCL by filing C.A.No.43/2017, C.A.No.56/2017. C.A.No.57/2017 and
C.A.No.124/2017. And all the contentions raised by EARCL are already considered by the Adjudicating
Authority and passed separate orders dated 02.08.2017 by rejecting all those contentions as not
meritorious.

SCL has 9.18% share in the total outstanding debt of SDAL. To that extent, the cash outflow will be
reduced post-merger. SCL is to receive substantial sum of monies from MFL, which is the largest
financial creditor of the SDAL (Corporate Debtor) amounting for around 69.32% of the total outstanding
debt of SDAL. And one of the conditions of the approved resolution plan is that MFL has to first make
necessary payments to SCL and SCL can make appropriate payments to MFL in order to establish the
bonafide of both the parties/genuinely of the transactions.

After going through the facts of the case in detail NCLT directed EARCL to extend full cooperation to
carry out the terms and conditions of the said resolution plan and also mandating the SCL and SDAL to
involve EARCL in the affairs of Company, in accordance with law. For more details, Visit at : -
http://huconsultancy.com/