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2020 (8) TMI 542 - AT - Insolvency and BankruptcyWithdrawal of CIRP proceedings on settlement between parties - date of filing of application for withdrawal to Adjudicating Authority - Section 12 A of IBC and Regulation 30 A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - HELD THAT - Constitution of CoC makes a difference to the original Applicant and the Corporate Debtor in settling. Before Constitution of CoC they both can settle and withdrawal can be permitted but once CoC is constituted, the Scenario changes and requirement is to settle with the other Financial Creditors and Operational Creditors and one is required to go before the CoC which may allow withdrawal with 90 per cent voting share. There is no reason why Parties cannot resort simultaneously to the window given by Hon ble Supreme Court in above Para 79. In our view when the Applicant wants to withdraw the application before Constitution of CoC, while resorting to amended Regulation 30 A, there is no bar for a party to simultaneously move Adjudicating Authority for withdrawal relying on Rule 11 of the NCLT Rules 2016. The Adjudicating Authority should receive such applications and can deal with the Applications in terms of above Para 79 while it may await response from IRP. The matter is remitted to the Adjudicating Authority - the original Operational Creditor are permitted to move the CoC under Section 12A of IBC. CoC will urgently consider Form F.A. hearing the Appellant also.
Issues involved:
Settlement with creditors, duty of Insolvency Resolution Professional (IRP) to process withdrawal, interpretation of Section 12 A of IBC, role of Committee of Creditors (CoC) in withdrawal process. Settlement with Creditors: The Appellant had made efforts to settle claims with Financial Creditors and Operational Creditors, but IRP raised issues regarding settlement with all Operational Creditors and KSIDC. Adjudicating Authority directed IRP to return an amount claimed for closure of CIRP, highlighting the Appellant's efforts to save the solvent Corporate Debtor. The Appellant emphasized compliance with regulations and timely submission of settlement documents to IRP, raising concerns about IRP's actions hindering the settlement process. Duty of IRP to Process Withdrawal: The Appellant argued that IRP failed to process the Application for withdrawal promptly as required under Regulation 30 A of the Insolvency and Bankruptcy Board of India Regulations. Referring to the Judgment in Swiss Ribbons Pvt. Ltd. vs. Union of India, the Tribunal emphasized the importance of consulting the overseeing body before allowing individual debtors to settle claims. The Tribunal highlighted the need for timely action by IRP in processing withdrawal applications and the impact of CoC constitution on the withdrawal process. Interpretation of Section 12 A of IBC: Citing Section 12 A of the IBC and Regulation 30 A, the Tribunal noted the Appellant's grievances against IRP for not facilitating the withdrawal process effectively. The Tribunal discussed the implications of the CoC's role in approving withdrawals, emphasizing the high threshold of ninety percent approval required for settlements. The Tribunal analyzed the constitutional validity of Section 12 A and highlighted the authority of NCLT and NCLAT to set aside CoC decisions regarding withdrawals. Role of Committee of Creditors (CoC) in Withdrawal Process: In light of the Judgment in Swiss Ribbons and subsequent regulatory amendments, the Tribunal recognized the challenges faced by Applicants and Corporate Debtors in the withdrawal process. The Tribunal suggested that parties could utilize the window provided by the Supreme Court to seek withdrawal before CoC constitution. Emphasizing the urgency of completing the withdrawal process, the Tribunal directed the CoC to consider the Appellant's request under Section 12 A of IBC promptly. The Tribunal instructed IRP not to take further steps in the CIRP until the CoC makes a decision on the withdrawal application, aiming to finalize the process within two weeks. This detailed analysis of the judgment provides insights into the issues related to settlement with creditors, IRP's duties, interpretation of Section 12 A of IBC, and the role of CoC in the withdrawal process, offering a comprehensive understanding of the legal complexities addressed by the National Company Law Appellate Tribunal.
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