NCLT Mumbai Bench Approves Sterling Healthcare Resolution Plan

Resolution Plan Gains Unanimous Support from Committee of Creditors; Statutory Dues Stand Extinguished

In a landmark decision, the National Company Law Tribunal (NCLT) Mumbai Bench-I, led by Sh. Sushil Mahadeorao Kochey and Sh. Prabhat Kumar, has approved the resolution plan for Sterling Healthcare Limited. This decision marks a significant step in the insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 (IBC).

The resolution plan, submitted by Mrs. Kanak S. Kewalramani, was unanimously approved by the Committee of Creditors (CoC) with a 100% voting share. The plan complies with all statutory provisions, including sections 29A, 30(2), and 31 of the IBC, as well as CIRP regulations. It is binding on all stakeholders, including government authorities and creditors, and provides for the extinguishment of statutory dues not included in the resolution plan.

Sterling Healthcare Limited, incorporated in May 2007, has faced financial difficulties leading to the initiation of the Corporate Insolvency Resolution Process (CIRP) in December 2023. The resolution plan aims to address these challenges, ensuring payment of insolvency resolution process costs, management of corporate affairs post-approval, and implementation supervision by the Resolution Professional.

The plan’s approval follows a rigorous process involving multiple meetings of the CoC, valuation by registered valuers, and a Swiss Challenge mechanism to ensure the best commercial offer. The resolution plan provides a structured payment plan for various stakeholders, including CIRP costs, financial creditors, and operational creditors.

A notable feature of the plan is its binding nature, as emphasized by the Supreme Court in the case of Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited. This ensures that all claims not part of the resolution plan are extinguished, providing clarity and finality to the insolvency resolution process.

The resolution plan also outlines the formation of a Monitoring Committee to oversee its implementation, comprising representatives from the financial creditor, the Resolution Applicant, and a Monitoring Professional. This committee will ensure the effective execution of the plan and compliance with statutory requirements.

In addition to addressing financial liabilities, the plan includes provisions for necessary amendments to the Memorandum and Articles of Association of Sterling Healthcare Limited, facilitating the smooth transition post-resolution.

The NCLT's decision brings hope for Sterling Healthcare Limited’s revival, providing a structured framework for addressing financial distress while ensuring compliance with legal obligations. The tribunal's order reinforces the role of the IBC in facilitating corporate restructuring and resolution, safeguarding the interests of creditors and stakeholders alike.

Bottom Line:

Approval of Resolution Plan under Insolvency and Bankruptcy Code, 2016 - Resolution Plan approved by 100% voting share of CoC members - Resolution Plan compliant with Section 30(2) of the Code and CIRP Regulations - Binding on all stakeholders including Government authorities and creditors - Statutory dues extinguished if not part of Resolution Plan - Plan implementation to be supervised by Resolution Professional.

Statutory provision(s): Sections 29A, 30(2), 30(6), 31(1) of the Insolvency and Bankruptcy Code, 2016; Regulations 37, 38, 39(4) of the CIRP Regulations.

Mr. Dhiren Shah, Resolution Professional of Sterling Healthcare Limited, (NCLT)(Mumbai Bench- I) : Law Finder Doc Id # 2810707