CORE EMBALLAGE LIMITED Vs. BLANK NAME

JUDGEMENT

(1.) THESE are the petitions filed by two petitioner Companies for sanction of a Scheme of Arrangement in the nature of Demerger and Transfer of Manufacturing Division of Core Emballage Limited (the De -merged Company) to CEL Packaging Private Limited (the Resulting Company) under Section 391 read with Sections 394 of the Companies Act, 1956.

(2.) THE De -merged Company is a listed public company engaged in the manufacturing of corrugated boxes and other packaging materials. It has been submitted that the Company has faced several financial crisis in the past and has been able to improve its net worth by entering into one time settlement with its lenders. However, it has substantial accumulated losses. The present scheme proposes transfer of its manufacturing division to a newly formed company and the consideration for the said undertaking is proposed to be paid to the de -merged Company which will help it to reduce its outstanding financial liabilities. The de -merged Company is proposed to continue with its trading activities. The petition gives the details of the advantages that are envisaged out of the said arrangement.

(3.) VIDE the order dated 8th August, 2008, separate meetings of the Equity Shareholders, Secured Creditors and Unsecured Creditors were directed to be convened and the meeting of the sole Preference Shareholder and Unsecured Loan Creditors were dispensed with in light of the written consent letters submitted by them, being placed on record. The meeting of the Equity Shareholders of the Resulting Company was dispensed with in view of the consent letters from all the shareholders approving the scheme being placed on record. The Secured Creditors and Unsecured trade Creditors of the De -merged Company unanimously approved the Scheme in the meetings convened respectively 25th September 2008 and 3rd October, 2008, whereas the scheme was approved by requisite statutory majority of 98.41% in number and 99.99% in value at the meeting of the Equity Shareholders convened on 3rd October 2008.