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2019 (7) TMI 1706 - Tri - Insolvency and BankruptcySettlement between the Parties i.e. the Corporate Debtor and the 1CICI Bank being a sole Financial Creditor on 24.05.2019 - One Time Settlement (OTS) as has been accepted and reduced in writing by way of a deed of settlement - section 60(5) of the Insolvency and Bankruptcy Code 2016 - HELD THAT - It is settled legal position that the RP and CoC are legally expected to explore and make every step for bringing resolution and revival of the company which is a rule while liquidation thereof can only be a last consequence. Further in the present matter this Adjudicating Authority has not yet passed a formal liquidation order. Therefore there can be no impediment for accepting such settlement even during the process of liquidation as the liquidator has been empowered under the Regulation 32 of the IBBI Liquidation Process Regulation 2016 that he can sell the assets of the company under liquidation as a going concern. Since the settlement has been arrived at between the Corporate Debtor and the sole Financial Creditor with 100% majority of the CoC no further requirement to keep continue of the CIRP. Hence it is hereby recalled in the light of the settlement arrived between the Corporate Debtor and the sole Financial Creditor. Consequently the moratorium declared in respect of the Corporate Debtor Company shall cease to have effect.
Issues:
Settlement between Corporate Debtor and Financial Creditor, Approval of settlement by Committee of Creditors, Withdrawal of liquidation application, Recall of Corporate Insolvency Resolution Process (CIRP), Legal position regarding settlement during liquidation process, Judicial precedents on timely completion of Corporate Insolvency Resolution Process. Analysis: The judgment by the National Company Law Tribunal, Allahabad Bench, involved various critical issues. Firstly, a settlement was reached between the Corporate Debtor and the Financial Creditor, ICICI Bank, which was approved by the Committee of Creditors (CoC) with 100% majority. The settlement involved an upfront payment and a subsequent payment within a specified timeframe. The CoC requested the withdrawal of the liquidation application and the recall of the ongoing Corporate Insolvency Resolution Process (CIRP) based on the settlement. The Tribunal considered the settlement offer, emphasizing the objective of the Insolvency and Bankruptcy Code to seek a viable resolution for the Corporate Debtor as a going concern. The Tribunal noted that the CoC's decision to accept the settlement offer was in line with judicial precedents emphasizing the importance of balancing timely completion of the insolvency resolution process and avoiding corporate liquidation. The Tribunal highlighted the legal provisions allowing for settlements during the liquidation process, particularly Regulation 32 of the IBBI Liquidation Process Regulation, 2016. The judgment referenced the Supreme Court's observation that corporate death should be avoided, and efforts should be made to continue running the corporate debtor as a going concern. Based on the legal position and judicial precedents, the Tribunal allowed the application for settlement (CA No. 196/2019) and ordered the withdrawal of the liquidation application (CA No. 13/2019). The Tribunal also directed the CoC to make necessary payments within a specified timeframe and declared the moratorium to cease effect. Additionally, another application seeking direction to consider a resolution plan became infructuous due to the settlement approval. Consequently, all relevant applications (CA No. 124/2019, CA No. 13/2019, and CA No. 196/2019) were disposed of, concluding the matter before the Tribunal.
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