explanatory notes eighth meeting of committee of creditors...

SRS Limited Committee of Creditors – Eighth Meeting Explanatory Notes

RBSA Restructuring Advisors LLP Ashok Kumar Gulla RBSA Restructuring Advisors LLP is an IPE Registered with IBBI Resolution Professional for SRS Ltd

1

Explanatory Notes

Eighth Meeting of Committee of Creditors (CoC) of SRS Limited to be held on

Wednesday, 6th March, 2019 at 11:00 A.M. 4th Floor, Avanta Business Centre

Pvt Ltd, Statesmen House, Barakhamba Road, Connaught Place, New Delhi-

110001

The meeting has been called to discuss and deliberate upon present status of resolution plans

to be received from shortlisted Resolution Applicants, to discuss application filed by other

parties with Hon’ble NCLT claiming ownership over certain properties and other issues

regarding Corporate Insolvency Resolution Process (CIRP). Various items of Agenda will be

taken up for noting /discussion/approval as detailed below:

Agenda Item No 1:

To ascertain quorum for the meeting in accordance with the provisions of Regulation 22 of

the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate

Persons) Regulations, 2016

As per the Regulation 22 (1) of the Insolvency and Bankruptcy Board of India (Insolvency

Resolution Process for Corporate Persons) Regulations 2016, a meeting of the Committee of

Creditors (“CoC”) shall be quorate if the members representing at least 33% of the voting

rights shall be present either in person or by video conferencing or other audio and visual

means. All the members of CoC including Authorised Representative of Deposit Holders are

requested to attend the meeting.

As discussed in seventh CoC meeting held on 15.02.2019, the claim of Assistant Commissioner

of Income Tax, Central Circle II, Faridabad was more than 10% of debt and therefore, they are

also given notice for attending this eight meeting of CoC as per Section 24(3)(C) of the

Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”). Also, as per Section 24(4) of IBC, 2016,

the operational creditor shall not have any right to vote in the meeting.



2

Agenda Item No 2:

To take note of the minutes of Seventh Meeting of Committee of Creditors (“CoC”) held on

15th February, 2019

The minutes of the Seventh Meeting of Committee of Creditors held on 15th February, 2019

was circulated to all the members on 18th February, 2019. The minutes of seventh CoC

Meeting shall be placed before members of CoC for taking them on record.

Agenda Item No. 3:

To discuss and take note of the total claims of creditors and voting share of the Committee

of Creditors

In terms of Regulations 7, 8, 8A & 9 of IBBI (Insolvency Resolution Process for Corporate

Persons) Regulations 2016 (“CIRP Regulations”), the Resolution Professional has received and

admitted claims of Financial Creditors being banks and Deposit Holders, Operational Creditors

including claims of workmen, employees and statutory authorities.

The details of total claims received and admitted are as under:

S. No. Name of the Creditor Total Amount claimed till 19.11.2018

(INR)

Amount of claim admitted

(INR)

1 Financial Creditors 10,61,19,43,992.80 10,60,82,58,569.06

2 Deposit Holders (class of creditors) 82,46,83,633.60 82,08,05,259.92

3 Operational Creditors (other than workmen/employee and statutory authorities)

33,67,48,645.82 29,48,90,843.44

4 Statutory Authorities 1,57,81,70,897.00 1,49,83,56,393.00

5 Workmen/Employees 1,55,45,390.00 1,53,58,431.45

TOTAL 13,36,70,92,559.22 13,23,76,69,496.87

The list of creditors whose claims have been received and admitted is uploaded at website of

SRS i.e. srsparivar.com as well as on both stock exchanges.

The voting share of members of CoC has undergone minor change from the details shared in

the last CoC Meeting held on 15.02.2019 due to receipt of further claims of deposit holders.



3

The voting share of members of CoC is given below:

S. NO. Name of the Financial Creditor

Amount Claimed (INR)

Amount of claim Admitted (INR)

Security Interest

Voting Share

1. State Bank of India 6,28,31,58,213.31

6,28,31,58,213.31 Secured 54.98%

2. Bank of India 2,23,79,59,143.69 2,23,79,59,143.69 Secured 19.58%

3. Union Bank of India

1,25,59,70,113.38 1,25,24,58,703.64 Secured 10.96%

4. Oriental Bank of Commerce

68,78,72,193.38 68,78,72,193.38 Secured 6.02%

5. Deposit Holders (Class of creditors)

82,46,83,633.60 82,08,05,259.92 Unsecured 7.18%

6. Syndicate Bank 14,13,19,684.04 14,13,19,684.04 Secured 1.24%

7. Axis Bank Limited 56,64,645.00 54,90,631.00 Secured 0.05%

Total 11,43,66,27,626.40 11,42,90,63,828.98 100.00%

Agenda Item No. 4:

To discuss the application filed by various parties with Hon’ble NCLT claiming ownership of

properties owned by Corporate Debtor.

I. Properties owned in SRS Tower, Faridabad:

Resolution Professional discussed in last CoC meeting held on 15.02.2019 about the

properties owned by SRS Limited in SRS Tower, Mewala Maharajpur, Faridabad. SRS Tower

was developed by SRS Real Infrastructure Private Limited. SRS Limited owns following

properties in SRS Tower located at Sector 31 Faridabad:

Unit No. Area (In Sq. Ft. in

Super Area)

Date of Purchase

Unit No. 46 on Ground Floor 1,816 Mar-12

Unit No. 305 on third floor 4,159 Mar-12

Unit No. 306 on third Floor 4,102 Mar-12

Unit No. 307 on third floor 2,503 Mar-12

Top Floor (Eighth Floor) 12,806 Mar-13

Lower Ground Floor 11,248 Jun-13



4

The possession of the above mentioned properties has not been handed over to Resolution

Professional by Corporate Tower Association of SRS Tower, Section 31, Faridabad. Hence,

application has been filed with Hon’ble NCLT, Chandigarh for getting possession of office

space at 305, 306 and 307 at 3rd Floor along with other properties owned in SRS Tower,

Mewala Maharajpur, Faridabad. The matter came up for hearing on 7th February 2019. The

Corporate Tower Association of SRS Tower has been asked to file a reply and the matter is

Iisted on 13.03.2019.

In this regard, it is informed by Resolution Professional that there are other claimants to

the above mentioned properties i.e. Units 305, 306 and 307.

SRS Limited had carried out a cancellation deed w.r.t. units 305, 306 and 307 at Third Floor

owned in SRS Tower on 11.04.2017 and surrendered the units back to the developer.

Thereafter the units 306 and 307 were sold to other party. It was found that the

cancellation deed entered into between SRS Limited and developer i.e. SRS Real

Infrastructure Limited was unregistered. Further, in the cancellation deed for Units 306 and

307, there was also a condition imposed in the deed that the Developer shall refund the

amount of INR 1.46 Crs to SRS Limited towards cancellation which has not been paid till

date. Thus, the units 305, 306 and 307 are still under the ownership of SRS Limited.

The Resolution Professional has filed a civil suit for clarification on the actual ownership of

Units 305, 306 and 307. The suit was not filed earlier as SRS Real infrastructure went into

Corporate Insolvency Resolution Process and moratorium was declared on 21.01.2019. The

CIRP proceedings were closed by Hon’ble NCLAT, New Delhi vide order dated 12.02.2019.

It is further informed by Resolution Professional that after purchase of Units 306 and 307,

the party i.e. the new owner gave the units on lease to SRS Limited vide rent agreement on

same date as that of cancellation i.e. 11.04.2017. The units were given on lease for 18 years

w.e.f. 01.04.2017 at a monthly rent of INR 2,30,000/- which shall escalate by 10% after

every three years of lease. SRS Limited was paying the rent to the party till September,

2017. Thereafter, no rent has been paid. After the commencement of CIRP, the party had



5

submitted his claim in Form B towards rent dues amounting to INR 38,96,200/- with

supporting documents including rent agreement and bank statements showing receipt of

rent from SRS Limited. The claim was rejected by the Resolution Professional for the

reasons mentioned above.

The party or the claimant had, therefore filed a case before Hon’ble NCLT, Chandigarh and

the matter was listed for hearing on 7th February, 2019 wherein the court has directed the

Resolution Professional to “file the complete response with regard to the decision of CoC

about the claims made by the applicant in Form B.” The next date of hearing is 13.03.2019.

The matter is placed before CoC for the discussion and its view on the ownership of Units

306 and 307 in SRS Tower.

II. Properties owned in SRS Mall, Sector-12, Faridabad:

The Resolution Professional appraised CoC on the status of shops sold in the SRS Mall,

Sector 12, Faridabad. He stated that while examining various documents after initiation of

CIRP, it was learnt that the SRS Mall has been mortgaged to the Consortium of Banks

against the Loans provided to SRS limited. The charge has been created by way of equitable

mortgage on 25.08.2007. Further, it was identified that few shops (17 in No. including

Outer Kiosk) in the mall has been sold after the mall was mortgaged to the Lenders and few

shops have been sold via Buyers Agreement (09 in No.). As per the opinion of the Legal

Counsel the sale of Shops after mortgaging and sale through Buyers Agreement does not

constitute a valid transfer, Hence, a Legal Notice was sent to all the 26 shop Owners who

had purchased the shops after 25.08.2007 and also via Buyers Agreement to surrender the

possession of the shops. Shop Owners in response to the Legal Notice has approached the

Hon’ble NCLT – Chandigarh for the necessary relief (one case is filed by one shop owner

and one case is filed by 19 shop owners).

Out of the above mentioned shops, SRS Limited had taken few Shops on rent. The Shop

Owners were paid Rent in the past except for the few months. Four shop owners had filed

the claim as operational creditor for the Rent not paid by SRS Limited. Since a proper Rent



6

agreement was executed between the Shop Owner and SRS Limited for the taking the

shops on Rent, hence the claims were admitted for the outstanding Rent.

The matter was discussed in the seventh meeting of CoC and members were of the view that

the SRS Mall at Sector 12, Faridabad was mortgaged with consortium lenders and they have

first charge over these properties. No specific approval was sought by corporate debtor from

Lenders for sale of these shops. Hence, these shop owners do not have a valid title to these

properties and any agreement for subsequent rent is not deemed to be valid.

Opinion of Gaggar & Co, Legal Counsel for Resolution Professional was also placed before CoC

which was as follows: “the bank has the charge over this property prior to the sale to the shop

owners and therefore such transfer is not valid unless there is a specific consent or permission

from the secured creditors. Since the Resolution professional has already taken necessary

steps of sending notice to the shop owners to whom such shops have been transferred in my

opinion the question of accepting their claim does not arise.”

The matter was heard by Hon’ble NCLT on February 6th and 7th, 2019. Hon’ble NCLT in its order

dated 07.02.2019 directed the Resolution Professional to reply atleast a week before the date

fixed. The matter is now listed for hearing on March 13, 2019. The Hon’ble NCLT has also

directed the Resolution Professional to update the Information Memorandum having being

circulated about the pendency of this application and not to take steps to take possession of

the shops of the applicant.

Agenda Item No. 5:

To discuss about the present status of resolution plans to be submitted by shortlisted

resolution applicants

As discussed and approved in the last CoC meeting held on 15.02.2019, the timeline for

submitting the resolution plan by potential Resolution Applicants was extended from

15.02.2019 to 06.03.2019.



7

It was also informed by Resolution Professional that he has received resolution plan from one

resolution applicant namely Movie Times Cineplex Pvt Ltd till 15.02.2019. Other resolution

applicants have requested for further extension of time for submitting the plan. It was

therefore decided to extend the time till 06.03.2019 to submit the plan and open all the

resolution plans received till date along with Movie Times Cineplex Pvt Ltd on 06.03.2019.

The resolution plans received till 06.03.2019 shall be placed before CoC for discussion.

Agenda Item No. 6:

To discuss cash flow of SRS Limited for the month of February, 2019

The cash flow statements of the Corporate Debtor for the month of February, 2019 is

presented below:

Cash Flow Statement for the period from 01.02.2019 to 26.02.2019

Particulars Amount (in INR Lacs)

Opening Balance as per Bank Statement (SBI TRA A/C) 366.59

Opening Balance as per Bank Statement (SBI GORAKHPUR A/C) 87.48

Opening Balance as per Bank Statement (SBI TAX A/C) 7.53

461.60

Box Office 476.36

Food & Beverages 203.66

BMS & PAYTM (PRISTINE & BHIWADI) 9.88

Mall Payment Received 11.04

Advertisement Income 4.00

Excess Amt. Received from Distributors 10.07

Other Income 1.17

Total Collection (including opening balance) 1,177.79

Expenditure

Distributor Share & Commission Charges 162.40

Raw Material Consumed (Purchase) 40.96

Employee Benefit Expense 62.15

Legal & Professional 20.58

Professional Fees to RP and IPE 16.87

Security Expenses 11.76

House Keeping Expenses 31.53

Printing & Stationery 0.57

Telephone Expenses 0.52

Conveyance Expenses 0.68

Diesel 0.10

Mall Payment 27.85



8

Advertisement & Publicity 1.50

CAM 37.75

Electricity 27.40

Lease Rent Paid 115.01

Repair and Maintenance - Others 10.45

Bms Payment (Roopa Construction Pvt. Ltd.) 11.00

Cinema License Fees Lucknow 1.80

Rates & Taxes & Show Tax Payment 0.45

Bank Charges 0.42

Taxi Hire Charge 1.27

TDS, GST & EPF Payment M/o January 2019 61.78

Total Outflow 644.80

Total Surplus/(Deficit) 532.99

Closing Bank Balance

SBI TRA A/C 438.57

SBI GORAKHPUR A/c 87.48

SBI TAX A/C 6.94

TOTAL 532.99

Agenda Item No. 7:

To discuss the issues of SRS Entertainment India Limited

The Resolution Professional in the Seventh CoC Meeting discussed the cash flows of SRS

Entertainment India Limited for the period from September, 2018 to January, 2019. It was also

mentioned that company has pending severe liabilities of around Rs 2.80 crores towards GST

and TDS which are yet to be paid. Notices for recovery have been issued by revenue

authorities. Due to non-payment of previous liabilities, the company is also not able to pay the

current statutory dues resulting in delay in payment and levy of heavy penalties.

An application is also filed against SRS Entertainment India Limited (“SREIL”) under section 9 of

Insolvency & Bankruptcy Code, 2016 in Hon’ble NCLT, Chandigarh by M/s Raj Pal Theatre

located at Muktsar Sahib, Punjab through its partner Mr. Jagjit Singh, towards non-payment of

rent.

CoC including the representative of Income Tax Office, Operational Creditor discussed the

cash flows and suggested the representatives from SRS Entertainment India Limited to contact



9

the statutory authorities requesting them to allow the company to pay the current dues till

the time they have sufficient funds to repay the old outstanding liabilities. Members of CoC

also stated that the said subsidiary should also create TDR in bank equivalent to current

outstanding liabilities so as to ensure the availability of funds.

Also, as per the books of accounts of SRS Limited, it is showing SRS Entertainment India Ltd as

creditor to the extent of Rs.1.81 Crores as on 31.03.2018 and Rs 5.14 Crores as on 21st August,

2018. Shri Raju Bansal, Director in SRS Entertainment Ltd requested CoC that SRS Ltd being

holding company should help its wholly owned subsidiary and requested to pay back part of

the amount shown as outstanding credit to SRS Entertainment India Ltd. The members

discussed in detail and were of the view that long term resolution to this issue may be

addressed by the Potential Resolution Applicant.

The cash flows for SRS Entertainment India Limited for the period from 01.02.2019 to

24.02.2019 is presented below:

Particulars Amount (in INR Lacs)

Opening Bank Balance (HDFC Bank, Faridabad) 57.89

Opening Bank Balance (Shivalik Bank, Saharanpur) 79.13

137.02

Box Office 75.12

Food & Beverages 31.05

Advertisement Income 1.35

Other Income 0.80

Total Collection (including opening balance) 245.33

Expenditure

Distributor Share & Commission Charges 20.08

Raw Material Consumed (Purchase) 10.56

Employee Benefit Expense 15.53

Legal & Professional 0.09

Security Expenses 1.71

House Keeping Expenses 3.44

Telephone Expenses 0.27

Conveyance Expenses 0.04

Printing & Stationery 0.16

CAM 14.07

Electricity 4.64

Lease Rent Paid 23.81

Rates & Taxes 0.01



10

Repair and Maintenance - Others 1.08

Bank Charges 0.13

TDS, EPF & ESIC Payment M/o JAN. 2019 7.51

Total Outflow 103.11

Total Surplus/(Deficit) 142.22

Closing Bank Balance

Closing Balance (HDFC Bank) 63.82

Closing Balance (Shivalik Bank) 78.40

TOTAL 142.22

In addition to the expenses mentioned in the above table, SRS Entertainment India Limited has

paid Rs 28.19 lakhs towards TDS for the period from April 2018 to December 2018. Cheques

with amount aggregating to Rs 41.78 lakhs have further been issued to various parties which

are also yet to be cleared. The company is also making efforts to pay GST for FY 2017-18.

Agenda Item No. 8:

To take note and ratify the Insolvency Resolution Process Costs (“CIRP Cost”)

Following expenses have been incurred by RP and his team for the month of February, 2019:

S. NO. Details Amount

1 Out of Pocket Expenses by RP & his team for the month of February, 2019

56,855/-

2 Expenses paid towards booking of venue for 7 CoC Meeting held on 15.02.2019

11,123/-

3 Video Recording for 7thCoC Meeting 6,000/-

Total 73,978/-

These expenses are in addition to fees of Resolution Professional, Insolvency Professional

Entity (RBSA Restructuring Advisors LLP), Valuers, Transaction Auditor and Legal counsel

already approved by CoC.

Agenda Item No. 9:

To discuss such other matters with the permission of majority of members of the

Committee of Creditors as may be deemed necessary for the smooth functioning of the CIRP

of the Corporate Debtor



11

a. Application filed with Hon’ble NCLT for undervalued and fraudulent transactions

Resolution Professional informed in the last CoC Meeting that Grant Thornton LLP,

Transaction Auditor appointed for Corporate Debtor, had completed the transaction audit

and had identified certain transactions as undervalued under Section 45 and fraudulent

under Section 66 Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”). Grant Thornton

LLP has submitted its final report and considering the same, Resolution Professional has

filed the application with Hon’ble NCLT, Chandigarh seeking appropriate directions under

IBC, 2016.

As per Regulation 35A(3) of IBBI (Insolvency Resolution Process for Corporate Persons)

Regulations, 2016, Resolution Professional has to file the report on the above mentioned

transactions with Hon’ble NCLT by 135th day from Insolvency Commencement Date which

was 04.01.2019. The applications, therefore, is filed with condonation of delay with

Hon’ble NCLT, Chandigarh.

b. Status of cases filed against operational creditors under Section 9 of IBC, 2016

The matter regarding refiling of case/restarting of cases under Section 9 of IBC, 2016

against various debtors for jewellery business was discussed during last CoC meetings.

Present status is as under:

a. Lucra Jewels Pvt. Ltd.(Delhi)

Application was filed under Section 9 of IBC, 2016 on 23.01.2018 with Hon’ble NCLT

Delhi. Resolution Professional have engaged Lex Advoco to represent the case on

behalf of Corporate Debtor. The matter came up for hearing and Hon’ble NCLT has

reserved the order.

b. Trustworthy Gems & Jewellery Pvt. Ltd.(Delhi)


Delhi. Resolution Professional has appointed En Pointe Advisors to represent the case

on behalf of Corporate Debtor. The matter came up for hearing and Hon’ble NCLT has

reserved the order.



12

c. Gehna Precious Metals Pvt. Ltd. (Delhi)

Application was filed under Section 9 of IBC on 10.01.2018 and was admitted for CIRP

on 28.05.2018 and thereafter was withdrawal on 20.07.2018 upon the application of

IRP i.e. Shri Sudhir Kumar Aggarwal as the Directors of Corporate Debtor was not

traceable and company was not operational. Now, application is being file through En

Pointe Advisors LLP, Legal Counsel to reinitiate the case under section 9 of IBC.

d. Celebration Jewellers Pvt. Ltd. (Delhi)


Chandigarh. Legal notice was served on 01.10.2018 and no reply has been received.

The directors of the company couldn’t be contacted. Resolution Professional has filed

the application for restoration of matter along with condonation of delay. Hon’ble

NCLT has issued Dasti/Notice to the party.

e. Saubhagya Ornaments Pvt. Ltd. (Delhi)


Delhi. Resolution Professional has engaged Lex Advoco to represent the case on

behalf of Corporate Debtor. The matter came up for hearing before Hon’ble NCLT,

New Delhi and it has reserved the order.

f. Vision Jewellers Pvt. Ltd.(Delhi)



The directors of the company couldn’t be contacted. Resolution Professional has

filed the application for restoration of matter along with condonation of delay.

Hon’ble NCLT has issued Dasti/Notice to the party.

g. Logical Jewellers Pvt. Ltd. (Delhi)


Delhi. Resolution Professional has engaged Lex Advoco to represent the case on



13

behalf of Corporate Debtor. The matter came up for hearing before Hon’ble NCLT,

New Delhi and it has reserved its order.

h. Achiever Bullions & Jewellers Pvt. Ltd.



The directors of the company couldn’t be contacted Resolution Professional has filed

the application for restoration of matter along with condonation of delay. Hon’ble

NCLT has issued Dasti/Notice to the party.

i. Satmaya Trading Co. Ltd.

Application was filed under Section 9 of IBC, 2016 on 05.02.2018 with Hon’ble NCLT,

Delhi. The matter came up for hearing on 05.10.2018 and got dismissed for non-

prosecution. Resolution Professional has engaged Lex Advoco to re-open the case

under Section 9 of the IBC, 2016. Resolution Professional is filing a restoration

application in this matter through Lex Advoco, legal counsel.

c. No response to Advertisement

Resolution Professional informed in the last CoC meeting held on 15.02.2019, that he has

released an advertisement for the post of professionals such as CS/CFO/Independent

Directors. Few candidates shared their resume for the post of Independent Directors and

CFO, however, after getting to know about the current position of the Corporate Debtor,

none of them agreed to work for the Company. No applications have been received for

the post of CS till date.

d. Penalty Notification

The Corporate Debtor has been receiving notices from stock exchanges and SEBI for

various non-compliances made w.r.t disclosures of financial statements for the FY 2017-

18, disclosures under SEBI (Listing Obligation and Disclosure Requirements) Regulations

etc. The said regulatory authorities have also levied various penalties for such non-



14

compliances. Resolution Professional has been replying to these authorities from time to

time about current situation of company and for waiver of such penalties.

Sd/- ASHOK KUMAR GULLA Insolvency Professional Regn. No: IBBI/IPA-003/IP-N00024/2017-18/10174 RBSA Restructuring Advisors LLP 9C, Hansalaya Builiding,15 Barakhamba Road, Connaught Place, New Delhi-110001 E-mail: [email protected]; [email protected]

mailto:[email protected]

explanatory notes eighth meeting of committee of creditors...

Documents