2021 (5) TMI 246 - Tri - Insolvency and Bankruptcy

Permission for withdrawal of Corporate Insolvency Resolution Process (CIRP) - Section 12A of Insolvency And Bankruptcy Code, 2016 (IBC) and Regulation 30A of Insolvency and Bankruptcy Board of India Insolvency Resolution Process for Corporate Persons Regulations, 2016, (Regulations) r/w Rule 11 of NCLT, Rules 2016 - HELD THAT - Perusal of the statement of the expenditure as made out at Page No. 37 discloses that apart from the fees as claimed by the IRP a major portion of the expenditure seems to have been incurred in respect of meeting of the expenditure in relation to Advocate fees for filing of the Application under Section 19(2) as well as the present Application and for filing a Counter to the Application as filed by the erstwhile Director under Section 60(5) of the IBC, 2016. Since already a sum of ₹ 2,00,000/- as represented by the Operational Creditor seems to have been paid and the additional cost in a sum of ₹ 75,000/- seems to have been incurred in relation to the legal cost, in view of non-cooperation on the part of the personnel of the Corporate Debtor and also in defending the Application as filed by the erstwhile Director of the Corporate Debtor, it is appropriate that the balance sum of ₹ 73,938.45 is required to be defrayed by the Corporate Debtor. The CIRP initiated against the Corporate Debtor stands withdrawn.

Issues:
1. Application for withdrawal of Corporate Insolvency Resolution Process (CIRP) under IBC and Regulations.
2. Compliance with procedural requirements and creditor involvement.
3. Legal costs and payment obligations.
4. Discharge of IRP duties and restoration of Board of Directors' powers.

Analysis:

Issue 1: Application for withdrawal of CIRP
The judgment involves an Application seeking withdrawal of the Corporate Insolvency Resolution Process (CIRP) under Section 12A of the Insolvency and Bankruptcy Code, 2016 (IBC) and Regulation 30A of the Insolvency and Bankruptcy Board of India Regulations. The Application was moved by the Applicant through the Interim Resolution Professional (IRP) appointed by the Tribunal. The IRP had initiated the CIRP against the Corporate Debtor, and subsequent events led to the request for withdrawal.

Issue 2: Compliance and Creditor Involvement
The Application highlighted the procedural steps taken, including the public announcement for claims, formation of the Committee of Creditors (CoC), and scheduling of the CoC meeting. However, due to the Covid-19 pandemic, the CoC meeting was postponed. Additionally, other legal applications were filed by the IRP and the erstwhile Directors of the Corporate Debtor, seeking compliance and withdrawal of the CIRP based on a settlement between the parties.

Issue 3: Legal Costs and Payment Obligations
The judgment addressed the payment of fees to the IRP by the Operational Creditor, with a specific mention of a payment made via Demand Draft. The IRP claimed a balance sum for the estimated Insolvency Resolution Process Cost, including legal expenses incurred for various applications and defenses. The Tribunal determined that the Corporate Debtor should defray the balance sum of the costs incurred, considering the non-cooperation of the Corporate Debtor's personnel.

Issue 4: Discharge of IRP Duties and Restoration of Board of Directors' Powers
Upon allowing the Application for withdrawal of the CIRP, the Tribunal ordered the payment of the balance sum by the Corporate Debtor to the IRP. Consequently, the CIRP against the Corporate Debtor was withdrawn, leading to the closure of related legal applications filed by the IRP and the erstwhile Directors. The duties of the IRP were discharged, and the powers of the Board of Directors, suspended during the CIRP initiation, were restored.

In conclusion, the judgment detailed the procedural steps, creditor involvement, legal costs, and the eventual withdrawal of the CIRP, leading to the discharge of the IRP's duties and the restoration of the Board of Directors' powers.

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