2021 (5) TMI 63 - Tri - Insolvency and Bankruptcy

Condonation of delay in filing application - fresh claim in CIRP - period of 90 days as prescribed under Regulation 12(2) of the IBBI (CIRP) Regulations, 2016 - HELD THAT - It is pertinent to mention herein that the Resolution Plan has already been received by the CoC as apprised by the RP and it is at the final stage of approval of the CoC (as per RP). At this belated stage, if such types of applications are allowed, the Resolution Plans already received by the CoC from the prospective Resolution Applicants, may get failed, as those are filed on the basis of Information Memorandum (IM). The prospective Resolution Applicants submitted their Resolution Plan on the basis of their financial capacity and availability of funds. There is every likelihood that, if the claims of the different creditors are being accepted in a phase manner and/or on such belated stage, that too after the stipulated time, so provided for submitting claims, in that event, the Resolution Plans can never get materialized and there would be no resolution of Corporate Debtor which is main object of the IB Code, more so, when CIRP is to be completed in a time bound manner. If such claim is accepted, then the Resolution Applicants have to make corrections in their plans, that apart, RP has to make corrections in the IM and its report, correction in the stakeholders list, etc., for which RP has to take permission from this Adjudicating Authority, which may further delay the CIRP. The Hon'ble Supreme Court in the matter of Arcelor Mittal India Private Limited vs. Satish Kumar Gupta Ors, 2018 (10) TMI 312 - SUPREME COURT unequivocally held that the entire time period within which the CIRP ought to be completed is strictly mandatory in nature and cannot he extended. It relied on the primary objective of the Code, which is to ensure a timely resolution process for a CD and principles of statutory interpretation to hold that the literal language of section 12 mandates strict adherence to the time frame it lays down. To enable this adherence to the outer time limit provided in the Code, the court also held that the model timeline provided in Regulation 40A of the CIRP Regulations should be followed as closely as possible . There is no merit in the instant application - Application dismissed.

Summary

Issues:
Delay in filing claim under Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:
1. The application was filed by the Sole Proprietor of a company seeking condonation of delay in filing the claim beyond the prescribed period under the Insolvency and Bankruptcy Code, 2016. The Applicant requested the Tribunal to direct the Resolution Professional to verify and admit the claim.

2. The Corporate Insolvency Resolution Process (CIRP) for the Corporate Debtor was initiated in December 2019, and the last date for submission of claims was in January 2020. The Applicant filed the claim in September 2020, well beyond the stipulated time, citing reasons related to the COVID-19 lockdown period.

3. The Resolution Professional (RP) opposed the application, highlighting that the claim was filed after more than 8 months from the last date for submission of claims. The RP contended that the lockdown period did not justify the delay in filing the claim and that the claim was submitted after the deadline even considering the relaxed lockdown period.

4. The RP informed the Applicant that the Resolution Plans were already in progress based on claims received and admitted until a specific date. Accepting the Applicant's claim at a belated stage could prejudice other creditors and disrupt the resolution process, which must be completed in a time-bound manner.

5. The Tribunal considered the arguments presented by both parties and emphasized the importance of timely completion of the CIRP. Allowing claims beyond the prescribed period could lead to delays, potential plan modifications, and hinder the resolution process, ultimately affecting the value of the Corporate Debtor's assets.

6. Citing relevant case laws, the Tribunal reiterated the significance of adhering to the timeframes set by the Insolvency and Bankruptcy Code to maximize the value of the Corporate Debtor's assets and ensure a successful resolution process.

7. Ultimately, the Tribunal found no merit in the Applicant's application for condonation of delay and dismissed the same, emphasizing the mandatory nature of the timeframes outlined in the Code and the need to preserve the value of the Corporate Debtor's assets through timely resolution.

Conclusion:
The Tribunal dismissed the application seeking condonation of delay in filing the claim under the Insolvency and Bankruptcy Code, emphasizing the strict adherence to prescribed timeframes to facilitate a successful resolution process and maximize the value of the Corporate Debtor's assets.