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2020 (1) TMI 1336 - Tri - IBCExclusion of certain period from Corporate Insolvency Resolution Process - Section 60(5) read with 12(3) of the Insolvency and Bankruptcy Code, 2016 and Rule 11 of the NCLT Rules 2016 - HELD THAT - Looking to the very object of IB Code, CoC desires to get exclusion in the CIRP period as there is every likelihood that some Resolution Plan will be accepted and/or approved by the CoC. In that event, a Corporate Debtor will be saved from Liquidation and more so, livelihood of number of employees will also be saved as it is dependent on the Corporate Debtor. Hon'ble Supreme Court in Committee of Creditors of COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS 2019 (11) TMI 731 - SUPREME COURT observed that even an extension beyond 330 days timeline as specified in the IB Code can be granted by the Adjudicating Authority under exceptional circumstances - the Supreme Court has observed that 330 days is the outer limit within which resolution of the stressed assets of the Corporate Debtor must take place. Thus, if the time is extended within the outer limit of 330 days, there is every likelihood that some Resolution Applicant may succeed for its acceptance and approval - the application so filed by RP is allowed by excluding 22 days from the CIRP period which was spent in negotiation with the prospective Resolution Applicants i.e. from 03.01.2020 to 24.01.2020.
Issues:
- Application for exclusion of certain period from Corporate Insolvency Resolution Process - Interpretation of Insolvency and Bankruptcy Code provisions regarding time limits and extensions - Consideration of Resolution Plans and approval by Committee of Creditors Issue 1: Application for exclusion of certain period from Corporate Insolvency Resolution Process The judgment pertains to an application filed by the Resolution Professional seeking an exclusion of a specific period from the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016. The application was made to exclude days spent in negotiation with prospective Resolution Applicants to consider their plans and prevent the Corporate Debtor from facing liquidation. The Resolution Professional requested the exclusion of 22 days from the CIRP period, citing the need for further evaluation and approval of Resolution Plans. Issue 2: Interpretation of Insolvency and Bankruptcy Code provisions regarding time limits and extensions The Tribunal analyzed the provisions of the Insolvency and Bankruptcy Code, emphasizing the objective of the Code to facilitate the timely resolution of insolvency cases in a time-bound manner. The judgment highlighted the importance of maximizing the value of assets, promoting entrepreneurship, and balancing the interests of stakeholders. It referred to a Supreme Court ruling allowing for extensions beyond the specified timeline under exceptional circumstances, with 330 days being identified as the outer limit for resolution of stressed assets before liquidation. Issue 3: Consideration of Resolution Plans and approval by Committee of Creditors The judgment discussed the significance of approving Resolution Plans by the Committee of Creditors (CoC) to save the Corporate Debtor from liquidation and protect the interests of employees. It referenced a Supreme Court decision that acknowledged the discretion of the Adjudicating Authority to extend time limits based on specific factors. In this case, the Tribunal concluded that granting an exclusion of 22 days from the CIRP period would potentially lead to the acceptance and approval of a Resolution Plan, aligning with the objectives of the Insolvency and Bankruptcy Code. In conclusion, the Tribunal allowed the Resolution Professional's application for exclusion of the specified period, emphasizing the importance of timely resolution to support entrepreneurship, credit markets, and economic growth. The judgment reflected a balanced approach in interpreting the Code's provisions and ensuring the protection of stakeholders' interests within the legal framework.
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