NCLT approves Net4 India resolution plan, valuing it above liquidation value

It matters to citizens as it finalizes the restructuring of a corporate debtor, determining how debts are paid to creditors and how equity is distributed.

Who it concerns: The order concerns Net4 India Limited (Corporate Debtor), Edelweiss Asset Reconstruction Company Limited (Financial Creditor), State Bank of India, other financial and operational creditors, and Open Platforms Private Limited (Successful Resolution Applicant).

What the document says

• The NCLT allowed the application for approval of the Resolution Plan under Section 31 of the IBC, 2016.
• The Resolution Plan was approved by the Committee of Creditors (CoC) with a voting share of 77.867%.
• State Bank of India (holding 20.801% voting share) rejected the plan, citing entitlement to payment under Section 30(2)(b) of the IBC.
• The plan provides for the payment of Rs. 50 Lacs as insolvency resolution process costs in priority to other payments.
• Existing equity shareholders' interests are reduced to zero (0 shares) after the Corporate Insolvency Resolution Process (CIRP).
• Edelweiss Asset Reconstruction Company Limited is to receive proceeds from the sale of Noida and Chennai properties (estimated Rs. 14.51 Crore) and 15% equity in the restructured company.
• State Bank of India is to receive 2% equity in the restructured company for its secured claim and 1% equity for its unsecured claim regarding corporate guarantees.
• The total amount provided under the plan is Rs. 196.28 Crore against total admitted claims of Rs. 462.48 Crore.

Also in the document

• The Tribunal noted that the amount proposed under the Plan is well above the Liquidation Value and Fair Value determined by valuers.
• The CoC condoned a delay in the submission of the performance security cheque by the Successful Resolution Applicant.
• The order was delivered on 18.08.2023 by a bench comprising Shri Bachu Venkat Balaram Das (Member Judicial) and Shri Rahul Bhatnagar (Member Technical).