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2020 (12) TMI 705 - Tri - Insolvency and BankruptcyExtension of a period of 90 days from the Corporate Insolvency Resolution Process (CIRP) period of Corporate Debtor - HELD THAT - We are mindful of the fact that w.e.f. 24.03.2020 the Central Government declared a nationwide lockdown and prohibited all non-essential activities in response to the onset of the COVID-19 pandemic. The lockdown was subsequently opened only partially in different parts of the state and in India. Due to severe liquidity crunch and dislocation of manpower, several businesses have shut down. Movement of men and material has been restricted. The Government has announced several steps to infuse more liquidity and to get the businesses running again. We are convinced that these extraordinary circumstances justify the exclusion of time as prayed for. By allowing the time as prayed for, the RP would get the requisite time to complete the CIRP as per the Rules laid down in this regard, be able to maximize the value of assets and prevent the Corporate Debtor from going into liquidation. A period of 90 days shall be excluded and the CIRP period would get extended by 90 days w.e.f. 26.05.2020, to enable the RP to conclude the CIRP in respect of the Corporate Debtor - Application allowed.
Issues:
1. Extension of the Corporate Insolvency Resolution Process (CIRP) period due to COVID-19 lockdown. Analysis: The case involved an application filed by the Resolution Professional seeking an extension of 90 days from the Corporate Insolvency Resolution Process (CIRP) period of the Corporate Debtor due to the unprecedented situation of COVID-19 and lockdown announced by the Government of India. The Resolution Professional highlighted that during the extension period, they could not function as per the Code and its regulations due to the lockdown. The RP sought an extension up to 01.09.2020 to submit a Resolution Plan. The Tribunal considered the provisions of the Insolvency and Bankruptcy Code, 2016, and the relevant rules in this regard. The Tribunal noted that as per the provisions of the Code, an extension of 90 days after the expiry of 180 days can be granted only once. However, under exceptional circumstances, the Authority can exclude the period during which the RP was unable to continue with the CIRP due to reasons beyond their control. Referring to the decision of the Hon'ble Apex Court in a similar matter, the Tribunal acknowledged the power to consider exclusion of time from the statutory period based on sufficient justification. Furthermore, the Tribunal cited a judgment by the Hon'ble NCLAT which outlined various grounds for excluding certain periods during the resolution process, including situations where the process is stayed by a court of law, or if no Resolution Professional is functioning, among others. Considering the impact of the nationwide lockdown due to the COVID-19 pandemic, the Tribunal found that the extraordinary circumstances justified the exclusion of time as requested by the RP. By allowing the extension, the RP would have adequate time to complete the CIRP, maximize asset value, and prevent the Corporate Debtor from liquidation. Consequently, the Tribunal granted the application, allowing an exclusion of 90 days from the CIRP period, starting from 26.05.2020, for the RP to conclude the CIRP and submit a report expeditiously. The Tribunal directed the RP to finalize the CIRP without further delay and scheduled a follow-up report submission on 24.08.2020.
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