2019 (10) TMI 1112 - AT - Insolvency and Bankruptcy

Validity of Resolution plan - Extension of CIRP - Exclusion of certain period - the Committee of Creditors would not consider the Resolution Plan due to completion of the Corporate Insolvency Resolution Process period of 270 days - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - In the present case, the Appellant has not challenged the order dated 20th February, 2019 whereby 90 days period was granted from retrospective date. In such circumstances, we are not inclined to deliberate on the issue whether the extension of 90 days from the retrospective date is right or wrong in absence of such challenge. Now 270 days is being over as per calculation on the basis of the order of extension, we hold that in absence of any other reason, the Adjudicating Authority has rightly rejected the application for exclusion of certain period. From the impugned order, it will be evident that the Adjudicating Authority has noticed that even during liquidation it is still open to the liquidator to sell the Corporate Debtor as a going concern - In the present case, no order of liquidation has been passed but we accepted that the period of Corporate Insolvency Resolution Process is completed, appropriate order is required to be passed by the Adjudicating Authority. Even if an order of liquidation is passed by the Adjudicating Authority, in such case, the liquidator is to follow the procedure laid down under Section 230 of the Companies Act, 2013. Appeal disposed off.

Issues:
1. Exclusion of certain period from the Corporate Insolvency Resolution Process.
2. Consideration of Resolution Plan by Committee of Creditors.
3. Extension of time for Resolution Plan submission.
4. Liquidation process and sale of Corporate Debtor as a going concern.
5. Compliance with Section 230 of the Companies Act, 2013.

Exclusion of Certain Period from the Corporate Insolvency Resolution Process:
The Appellant, a Resolution Applicant, filed a Resolution Plan for a Corporate Debtor, but the Committee of Creditors did not consider it due to the completion of the 270-day Corporate Insolvency Resolution Process period. The Resolution Professional of the Corporate Debtor sought exclusion of 43 days based on the Committee of Creditors' decision. The Adjudicating Authority dismissed the application for exclusion, citing reasons including the non-approval of the Resolution Plan by the Committee of Creditors and the Resolution Plan value being lower than the liquidation value. The Appellant contended that the Committee of Creditors had indeed asked the Resolution Professional to seek exclusion of the period.

Consideration of Resolution Plan by Committee of Creditors:
The Adjudicating Authority noted that the Committee of Creditors had not passed a resolution seeking exclusion or extension of time as requested by the Resolution Professional. The Authority granted a 90-day extension, but the Appellant argued that only 68 days were effectively granted. The Adjudicating Authority upheld its decision, stating that as the 270-day period had expired, and in the absence of any other valid reason, the exclusion application was rightly rejected.

Extension of Time for Resolution Plan Submission:
The Adjudicating Authority's order dated 20th February, 2019, granting a 90-day extension from a retrospective date was discussed. The Appellant did not challenge this order, and it was deemed that the extension was correctly applied. As the 270-day period had lapsed based on the extension order, the Authority's rejection of the exclusion application was deemed appropriate.

Liquidation Process and Sale of Corporate Debtor as a Going Concern:
The Adjudicating Authority highlighted the possibility of selling the Corporate Debtor as a going concern even during liquidation. While no liquidation order had been issued in this case, it was acknowledged that the Corporate Insolvency Resolution Process was completed, necessitating an appropriate order from the Authority. Reference was made to the procedure under Section 230 of the Companies Act, 2013, emphasizing the need to maximize assets and balance stakeholders' interests.

Compliance with Section 230 of the Companies Act, 2013:
The judgment outlined the process under Section 230, emphasizing the importance of approval of schemes beneficial for the Corporate Debtor's revival. The liquidator was directed to follow the Appellate Tribunal's directions and take necessary steps under Section 230. If compromise or arrangement proposals were made, the liquidator was instructed to move an application before the Adjudicating Authority. The judgment concluded by allowing the Appellant to negotiate with creditors and the liquidator for a Resolution Plan under Section 230.

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