2018 (1) TMI 1192 - Tri - Insolvency and Bankruptcy

Seek extension of moratorium period of the Corporate Debtor beyond 180 days - Held that - The object of granting moratorium period is to complete the resolution process but not to defeat the claims of the Operational Creditors and others under the guise of moratorium. Moreover, when the Code prescribes 180 days moratorium period, any application seeking extension of the period of 180 days must be filed by the Resolution Professional before the expiry of 180 days. But this application by the Resolution Professional was filed after the expiry of the moratorium period of 180 days. The contention of the applicant that the Committee of Creditors moved an application seeking extension of moratorium period before the expiry of 180 days is not a ground to entertain this application. The observation of this Adjudicating Authority that the Resolution Professional, after his appointment, can file application seeking extension of moratorium period will not absolve the Resolution Professional to seek extension of time before the expiry of the period of 180 days. This application seeking extension of moratorium period, having been filed beyond the period of 180 days, is not maintainable and this Adjudicating Authority is of the considered view that, even otherwise, there are no grounds to extend the period of moratorium. Hence, this application is dismissed.

Summary

Issues:
1. Extension of moratorium period beyond 180 days under Section 12(3) of the Insolvency and Bankruptcy Code, 2016.

Analysis:
The Tribunal addressed the issue of seeking an extension of the moratorium period beyond 180 days for the Corporate Debtor, Asian Natural Resources India Limited. The Committee of Creditors (CoC) authorized the Resolution Professional (RP) to seek the extension based on various grounds. These grounds included the need to examine preferential and undervalued transactions, obtain valuation reports for assets, lack of proper record of admitted claims, understanding issues with a creditor, and finalizing the Information Memorandum. The RP highlighted the importance of identifying transactions, taking over documents from the previous Interim Resolution Professional, and updating the CoC on necessary actions. The Chairman emphasized the significance of complying with the Adjudicating Authority's directions and the requirements of the Insolvency and Bankruptcy Code 2016, necessitating the extension of the Corporate Insolvency Resolution Process (CIRP) under Section 12.

The Tribunal delved into the background of the case, detailing the initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor by IDBI Bank Limited, the appointment of the Interim Resolution Professional (IRP), and subsequent developments leading to the appointment of the Resolution Professional. The RP filed an application under Section 12(2) of the IB Code seeking an extension of the moratorium period, as authorized by the CoC. The Tribunal examined the timeline of events, highlighting the meetings of the Committee of Creditors and the RP's actions in response to the directions of the Adjudicating Authority.

The Tribunal scrutinized the legal aspects concerning the extension of the moratorium period under Section 12(3) of the IB Code. It emphasized the discretion of the Adjudicating Authority to extend the moratorium if the CIRP cannot be completed within 180 days. The Tribunal noted the lack of efforts in obtaining asset valuations, failure to involve an Operational Creditor in meetings, allegations of collusion, and the inability of the CoC to agree on the appointment of a Resolution Professional. The Tribunal concluded that the application for an extension of the moratorium period, filed after the expiry of 180 days, was not maintainable. It highlighted the importance of timely actions in the resolution process and dismissed the application, directing the CoC to proceed as per the provisions of the Insolvency and Bankruptcy Code.