2021 (6) TMI 1074 - Tri - Insolvency and Bankruptcy

Seeking withdrawal of CIRP of Corporate Debtor - Seeking to constitute a revised CoC consisting of only Operational Creditors - original Financial Creditors who constituted the CoC had given letters of withdrawal - Section 12A of IBC, 2016 - HELD THAT - It is noted that pursuant to the orders passed by this Tribunal, two CoC meetings were convened by the RP and in none of the meeting the RP has moved an agenda for fixing his fee / remuneration, however after CoC passing a Resolution for withdrawal of the Application under Section 12A of IBC, 2016 the RP seeks for fixing his fees. However, it is seen from FORM FA presented before this Tribunal that Bank Guarantee in a sum of ₹ 10 lakh, has been provided towards fees and costs of the Resolution Professional by the Operational Creditor. However, an objection is taken in this regard in relation to the person who had taken the Bank Guarantee (BG) not to be the party concerned, but by a third party company. Learned Senior Counsel for the Board of Directors whose powers stand suspended gives an undertaking on behalf of them that the BG will not be returned unhonoured under any circumstances and that the amount for which BG has been given will be duly met. Taking into consideration the said submissions made by the Ld. Counsel for the Applicant/RP/Respondents as well as the averments contained in the Application and also based on the unanimous Resolution passed by the CoC on 25.05.2021 under Section 12A of IBC, 2016 for withdrawal of CIRP of the Corporate Debtor, this instant Application stands allowed and in the circumstances, petition stands withdrawn. Consequently, the CIRP initiated against the Corporate Debtor also stands withdrawn. Application closed.

Summary

Issues Involved:
1. Urgent hearing of MA/6/2021.
2. Constitution and validity of the Committee of Creditors (CoC).
3. Withdrawal of CIRP under Section 12A of IBC.
4. Fee and remuneration of the Resolution Professional (RP).

Detailed Analysis:

1. Urgent Hearing of MA/6/2021:
The application for urgent hearing of MA/6/2021 was moved by the Board of Directors of the Corporate Debtor, whose powers stood suspended. The urgency arose after the Supreme Court restored the CIRP order on 03.03.2021, and the RP moved MA/6/2021 citing non-cooperation from the Directors. The Tribunal initially granted time for filing a counter affidavit and subsequently directed the RP not to precipitate the CIRP process pending a Section 12A application consideration.

2. Constitution and Validity of the Committee of Creditors (CoC):
The RP sought to constitute a revised CoC consisting solely of Operational Creditors, arguing that the original Financial Creditors had withdrawn. The Tribunal found this approach incorrect, emphasizing that the original CoC formed in 2017 remains valid due to the Supreme Court's restoration of the initial CIRP order. The Tribunal directed the RP to convene a meeting of the original CoC members and not to proceed with a de novo CoC. The RP was instructed to report the outcome of the CoC meeting within ten days.

3. Withdrawal of CIRP under Section 12A of IBC:
The Tribunal considered the unanimous resolution passed by the CoC on 25.05.2021 for the withdrawal of CIRP under Section 12A of IBC. The resolution was supported by the Operational Creditor's submission of Form FA. The Tribunal allowed the application, resulting in the withdrawal of CP/597/IB/2017 and the cessation of CIRP against the Corporate Debtor. The Tribunal directed the RP to hand over the management back to the Board of Directors.

4. Fee and Remuneration of the Resolution Professional (RP):
The RP raised concerns about unpaid fees, but the Tribunal noted that no agenda for fee fixation was moved in CoC meetings. The Operational Creditor provided a Bank Guarantee of ?10 lakh for the RP's fees and costs. The Tribunal accepted the undertaking from the Board of Directors to honor the Bank Guarantee and dismissed the RP's contention regarding fees.

Conclusion:
The Tribunal's judgment addressed the urgency of hearing MA/6/2021, validated the original CoC's constitution, approved the withdrawal of CIRP under Section 12A, and resolved the RP's fee issue. The management of the Corporate Debtor was restored to the Board of Directors, concluding the CIRP initiated by the Tribunal's order dated 17.11.2017.