2021 (1) TMI 1031 - Tri - Insolvency and Bankruptcy

Direction to Respondent to permit the Advocate, Chartered Accountant, Company Secretary of the Corporate Debtor/ Applicant to attend the meetings of Committee of Creditors - Direction to Respondent to provide the copies of all documents in connection with the CIRP process to the mentioned professionals - HELD THAT - From Regulation 24 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, it is clear that the Resolution Professional has the power and responsibility to monitor and manage the operations and assets of the enterprise. The professional will manage the resolution process of negotiation to ensure balance of power between the creditors and debtor, in order to protect the rights of all creditors. The professional has to ensure the reduction of asymmetry of information between creditors and debtor in the resolution process. Section 24 of the Insolvency and Bankruptcy Code, 2016 provides that if there are Financial Creditors to Corporate Debtor, only Financial Creditor can attend and vote in the meeting. Directors and partners can only attend the meeting of Committee but shall not have any right of voting and their absence does not invalidate any of the proceedings, which means that even if they are allowed to attend the meeting of Committee of Creditors, they will be only silent spectators and they have no say on any of the transactions in the proceedings - This Tribunal is of the view that by allowing the Advocate/ CA/ Company Secretary of the Corporate Debtor no purpose will be served. The Corporate Debtor itself is sufficient to provide any of the documents/papers/details sought by the Resolution Professional during the proceedings. Providing of copies of all documents in connection with the CIRP process to the Corporate Debtor - HELD THAT - As rightly stated by the Resolution Professional it is the discretion of the Resolution Professional to appoint Accountants, legal and other professionals following the due process as specified by the IBBI under Section 25(2)(d) of Insolvency and Bankruptcy Code, 2016 and that Resolution Professional is not permitted to disclose any information pertaining to the CIRP to any third parties including Advocate/ CA/ Company Secretary this prayer also cannot be granted. This Tribunal cannot travel beyond the IBC Regulations and pass orders contrary to the Regulations - Application dismissed.

Summary

Issues Involved:
1. Whether an Advocate, Chartered Accountant, and Company Secretary of the Corporate Debtor can attend the meetings of the Committee of Creditors.
2. Whether the Resolution Professional has to provide copies of all documents in connection with the CIRP to the professionals mentioned above.

Detailed Analysis:

Issue 1: Attendance of Professionals in CoC Meetings
The Applicant, M/s. Propyl Packaging Limited, sought permission for their Advocate, Chartered Accountant, and Company Secretary to attend the meetings of the Committee of Creditors (CoC). The Applicant argued that these professionals could assist the Resolution Professional by providing necessary information and ensuring compliance with legal and financial requirements. They emphasized that the CIRP process is complex, and professional assistance is crucial for the Corporate Debtor to understand and navigate the process.

The Resolution Professional countered that the application is not maintainable under Section 17 of the Insolvency and Bankruptcy Code, 2016 (IBC), as the management of the Corporate Debtor vests with the IRP from the date of appointment. The powers of the Board of Directors are suspended and exercised by the IRP. The Resolution Professional argued that only Financial Creditors can attend CoC meetings as per Section 21 of IBC, and no other person can participate without the Resolution Professional's permission, as per Regulation 24 of the IBBI Regulations, 2016.

The Tribunal examined the relevant provisions, including Section 21 and Section 24 of IBC, and Regulation 24 of the IBBI Regulations, 2016. It concluded that the Resolution Professional has the authority to manage the resolution process and ensure a balance of power between creditors and the debtor. The presence of professionals other than those specified in the regulations would not serve any purpose, as they would only be silent spectators without any voting rights.

Issue 2: Provision of CIRP Documents to Professionals
The Applicant also sought copies of all documents related to the CIRP process for their professionals. The Resolution Professional contended that it is within their discretion to appoint accountants, legal, and other professionals as per Section 25(2)(d) of IBC. They are not permitted to disclose any information pertaining to the CIRP to third parties, including the Applicant's professionals.

The Tribunal agreed with the Resolution Professional's stance, emphasizing that the disclosure of CIRP documents to third parties is not allowed. The Resolution Professional must follow the due process specified by the IBBI and maintain confidentiality.

Conclusion:
The Tribunal dismissed the application, stating that allowing the Advocate, Chartered Accountant, and Company Secretary of the Corporate Debtor to attend CoC meetings would not serve any purpose. Furthermore, the request for CIRP documents was denied, as the Resolution Professional is not permitted to disclose such information to third parties. The Tribunal upheld the regulatory framework of the IBC and IBBI Regulations, ensuring that the resolution process is conducted within the prescribed legal boundaries.