2020 (1) TMI 1222 - Tri - Insolvency and Bankruptcy

Extension of CIRP period by 90 days beyond 180 days which is due to expire on 5th January, 2020 - Section 12(2) of read with Regulation 40 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulation, 2016 - HELD THAT - In the 6th COC meeting dated 22.11.2019, the member of the COC, in order to keep the Corporate debtor as going concern and for issuance of fresh FORM G; the committee of creditors with 100% voting in favour has considered and approved the extension of CIRP period beyond the existing period of 180 days and to file an application before this Adjudicating Authority for extension of CIRP for another 90 days, beyond a period of 180 days in line with the provisions of Section 12(2) of the Insolvency Bankruptcy Code(Amendment) Act, 2019. Thus, a period of 90 days to be extended for in order to complete the CIRP - the judgment which can be relied upon of Hon'ble Supreme Court In the matter of Swiss Ribbons Private, Limited. And Others v. Union of India and Others 2019 (1) TMI 1508 - SUPREME COURT contending that if the time sought for by the Corporate Debtor to end of the CIRP is not granted then the consequence for the Corporate Debtor is to go for liquidation which is not at all the objective of the Code. This Authority is of the considered view that the circumstances justify the extension of 90 days beyond 180 days - application is disposed of, extending 90 days from the date on which the CIRP is going to expire i.e. 5th January, 2020 - List on 28.01.2020 for filing of the progress report.

Summary

Issues:
Extension of CIRP period under Section 12(2) of IBC Regulation 40.

Analysis:
The application was filed by the Resolution Professional (RP) seeking an extension of the Corporate Insolvency Resolution Process (CIRP) period by 90 days beyond the initial 180 days, which was set to expire soon. The CIRP had been initiated against the corporate debtor, and an Interim Resolution Professional had been appointed. The proposed Resolution Applicant failed to submit the resolution plan within the allowed period, leading to the need for an extension. The RP prepared a revised Expression of Interest (EOI) and eligibility criteria for evaluation matrix to attract more applicants. The Committee of Creditors (COC) approved these revised terms in a meeting, along with the extension of the CIRP period by 90 days with 100% voting in favor.

The RP highlighted the necessity of extending the CIRP period to allow for the completion of the resolution process, citing the judgment of the Hon'ble Supreme Court in the case of Swiss Ribbons Private, Limited. The Supreme Court emphasized the importance of reorganization and insolvency resolution in a time-bound manner to maximize the value of assets and promote entrepreneurship. Liquidation should only be considered as a last resort, with the primary focus being on the revival and continuation of the corporate debtor. The legislation aims to protect the corporate debtor's interests and assets during the resolution process, ensuring timely resolution for the benefit of all stakeholders.

Considering the decisions relied upon and the factual circumstances presented, the Authority concluded that the extension of 90 days beyond the initial 180 days was justified. Consequently, the application for extension was granted, and the CIRP period was extended from the impending expiration date. A progress report filing was scheduled for a later date to monitor the developments in the resolution process.