Scheme of revival and rehabilitation:
The company administrator shall prepare or cause to be prepared a scheme of revival and rehabilitation of the sick company after considering the draft scheme filed along with the application under section 254.
A scheme prepared in relation to any sick company under sub-section (1) may provide for any one or more of the following measures, namely:-
- The financial reconstruction of the sick company;
- The proper management of the sick company by any change in, or by taking over, the management of such company;
- The amalgamation of
- The sick company with any other company; or
- Any other company with the sick company;
- Takeover of the sick company by a solvent company;
- The sale or lease of a part or whole of any asset or business of the sick company;
- The rationalization of managerial personnel, supervisory staff, and workmen in accordance with law;
- Such other preventive, ameliorative and remedial measures as may be appropriate;
- Repayment or rescheduling or reconstructing of the debts or obligations of the sick company to any of its creditors or class of creditors;
- Such incidental, consequential or supplemental measures as may be necessary or expedient in connection with or for the purposes of the measures specified in clauses (a) to (h).
Sanction of the scheme:
The scheme prepared by the company administrator under section 261 shall be placed before the creditors of the sick company in a meeting convened for their approval by the company administrator within the period of sixty days from his appointment, which may be extended by the tribunal up to a period not exceeding one hundred twenty days.
The administrator of the company may convene separate meetings of the secured and the unsecured creditors of the company and in case the scheme been approved by the unsecured creditors representing one-fourth in value of the amount which is owned by the company to such creditors and the secured creditors, represents three fourths in value of the amount outstands against financial assistance disbursed by such creditors to the sick company, the company administrator may submit the scheme before the tribunal for sanctioning the scheme.
The scheme relates to sick company amalgamation with any other company, such scheme may, in addition to the approval of the creditors of the sick company under the sub-section, may laid before the general meetings of both the companies for the approval by their respective shareholders and such scheme may be proceeded with unless been approved, either with or without any modification by passing a special resolution by the shareholders of the company.
- The preparation of scheme by the company administrator shall be examined by the tribunal and a copy of the scheme with modification, if any, made by the tribunal shall be sent in draft to the sick company and the company administrator in case of amalgamation and also to any other company concerned and the tribunal may publish or cause to be published the draft schemed in brief in such daily newspapers as the tribunal that may be considered necessary for suggestions and an objections, if any within such period as the tribunal which has to be specified.
- The complete draft scheme shall be kept at the place where the registered office of the company is situated or at such places as mentioned in the advertisement.
- The tribunal may make such modification, if any, in the draft scheme as it may consider necessary in the light of the suggestions and objections received from the sick company and the company administrator and also from the transferee company and any other company concerned in the amalgamation and from any shareholder or any creditors or employee of such companies.
- On the receipt of the scheme under sub-section (3), the tribunal shall within sixty days, therefore, after satisfying that the scheme had been validly approved in accordance with this section, pass an order sanctioning such scheme.
- Sanctioned scheme provides a transfer of any liability or property of the sick company to any other company or a person or where such scheme provides a property transfer or liability fo any other company or a person in favour of the sick company, then by virtue of and to the extent provide in, the scheme on and from the date which comes for operation of the sanctioned scheme or any other provision thereof, the particular property can be transferred to or vest in, the liability may become the liability of such other person or company or in case, the sick company.
- The sanctioned scheme shall be reviewed by the tribunal an can make such modifications, since it may deem fit or maybe order in writing the direct administrator of the company in order to prepare a fresh scheme provides for such measures which are considered necessary by the company administrator.
- The sanction which has been accorded by the tribunal under sub-section (4) may be conclusive evidence that all the requirements of the scheme relate to the reconstruction or amalgamation or any other measure specified therein have been complied with and a copy of the sanctioned scheme which is certified in writing by an officer of the tribunal to be a true copy thereof shall in all the legal proceedings be admitted as evidence.
- The sanctioned scheme copy which has been referred in the sub-section (4) may be filed by the registrar by the sick company within the duration of thirty days from the date of receipt of a copy.
Scheme to be binding:
On and from the date of the coming into operation of the scheme or any provisions, the scheme or such provisions may bind to the sick company and the transferee company or as the case may be, the other company and also on the creditors, shareholders, employees, and guarantors of the said companies.
Implementation of the scheme:
The tribunal shall, for the purpose of effective implementation of the scheme, have the power to enforce, modify or terminate any contract or agreement or any obligation pursuant to such agreement or contract entered into by the company with any other person.
The tribunal may, if it seems expedient or necessary to do, as per the order in writing, authorize the administrator of the company appointed under section 259 in order to implement a sanctioned scheme till its implementation on such terms and conditions as may be specified in the order
Where the whole or substantial assets of the undertaking of the sick company are sold under a sanctioned scheme, the sale proceeds shall be applied towards implementation of the scheme in such manner as the tribunal may direct:
Provided that debtors and creditors shall have the power to scrutinize and make an appeal for review of the value before a final order of fixing value.
Where it is difficult to implement the scheme for any reason or the scheme fails due to non-implementation of obligations under the scheme by the parties concerned, the company administrator, the company, the secured creditors or the transferee company in a case of amalgamation, may make an application before the tribunal for modification of the scheme or to declare the scheme has failed and that the company may be wound up.
The tribunal shall, within thirty days of presentation of an application under sub-section (4), pass an order for modification of the scheme or as the case may be, declaring the scheme has failed and pass an order for the winding up of the company if three-fourths in value of the secured creditors consent to the modification of the scheme or winding up of the company.
Where an application under sub-section (4) has been made before the tribunal and such application is pending before it, such application shall abate, if the secured creditors representing not less than three-fourths in value of the amount outstanding against financial assistance disbursed to the sick company have taken any measures to recover their secured debt under sub-section (4) of section 13 of the securitisation and reconstruction of financial assets and enforcement of security interest act.