NCLT approves Cochin Shipyard's resolution plan for Tebma Shipyards

National Company Law Tribunal, Chennai (NCLT) has approved Cochin Shipyard (CSL)'s resolution plan for Chennai-based shipbuilding firm Tebma Shipyards Limited (TSL) under the Corporate Insolvency Resolution Process (CIRP) of the Insolvency and Bankruptcy Code, 2016. Lenders will be taking a huge haircut since CSL's plan proposes to pay only 9.74 per cent of TSL's admitted debt amounting to Rs 602.39 crore.

Jotun India Private Limited, an operational creditor, had filed an application under Section 9 of the IBC against Tebma Shipyard, and NCLT, through a September 2018 order, admitted the application and initiated Corporate Insolvency Resolution Process (CIRP) as against Tebma. The tribunal appointed N Kumar as the Interim Resolution Professional (IRP).

As per CSL's resolution plan the resolution applicant (CSL) proposes a sum of Rs 65 crore as the amount payable to all stakeholders as full and final settlement and discharge of all the claims of the corporate debtor (TSL), including CIRP Costs.

Financial creditors to Temba Shipyards include State Bank of India (with an admitted debt of Rs 339.22 crore), Andhra Bank (Rs 108.21 crore), IDBI Bank (Rs 49.15 crore) Syndicate Bank (Rs 39.67 crore), ICICI Bank (Rs 38.98 crore) and Punjab National Bank (Rs 27.16 crore). Total debt stands at Rs 602.39 crore and the amount provided for the financial creditors under the CSL's plan is Rs 58.65 core, which is 9.74 per cent of pay out on admitted debt.

The plan also talks about the exclusion of two ships, which are not required for continuing the current operations of the company and are occupying space at TSL's Maple Yard, as an impediment to the company's revival. CSL will sell both the vessels and the financial creditors are entitled to receive the net proceeds from their disposal, in addition to the amount provided in the plan.

While the liquidation value of TSL is around Rs 89.09 crore, the proposal is for Rs 65 crore. The Resolution Professional said the Committee of Creditors has voted in favour of the resolution plan after deliberating upon these aspects, even if the Resolution Plan value is lower than the Liquidation value. This is primarily because they are interested in the revival of the Corporate Debtor rather its death by Liquidation, the Order said.