2021 (6) TMI 324 - Tri - Insolvency and Bankruptcy

Seeking extension of time period for completion of the Corporate Insolvency Resolution Process - only a short period of time left for CIRP process - HELD THAT - It is almost as if the CoC and the resolution applicant are both under an impression that just because resolution is preferable over liquidation, and the resolution applicant is a State entity, any number of exclusions will be granted just for the asking. Granting the present request (for exclusion upto 15.06.2021) will mean that the CIRP has carried on for a period of 483 days beyond the outer limit of 330 days from the scheduled close on 19.02.2020 (upon completion of 330 days in terms of the second proviso to section 12(3) of the Code) - This sleight of hand in breaching the CIRP timeframe more than a year beyond the maximum period of 330 days for the completion of the process, but somehow fitting it into the legal time frame through the device of exclusions must be called out. A well-meaning stratagem devised by the Hon'ble Supreme Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS 2019 (11) TMI 731 - SUPREME COURT declaring that if, on the facts of a given case, it can be shown to the Adjudicating Authority or the Appellate Authority under the Code that only a short period of time is left for completion of the insolvency resolution process beyond 330 days, and that it would be in the interest of all stakeholders that the corporate debtor be put back on its feet instead of being sent into liquidation, it may be open in such cases for the Adjudicating Authority to extend time beyond 330 days, is being misused time and again to cover up the tardy process of completion of CIRP. The prayer for extension of the CIRP from 01.05.2021 till 30.06.2021, for completion of the Corporate Insolvency Resolution Process of the Corporate Debtor is granted - it is also directed that a copy of this order be sent to the Chairman Managing Director of NTPC Limited, and also to the Chief General Managers of the individual members who are banks, and to the Managing Directors of the other entities constituting the Committee of Creditors to enable them to have a hard look at the snail's pace at which the CIRP is progressing - application allowed.

Summary

Issues:
Extension of time period for completion of Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016.

Analysis:
The Tribunal addressed the application filed by the Resolution Professional seeking an extension of the time period for completing the CIRP of the Corporate Debtor. The Resolution Plans submitted by NTPC Ltd. and Adani Power Ltd. faced delays due to the Covid-19 pandemic and regulatory orders. The Resolution Professional presented the updated Resolution Plan from NTPC to the Committee of Creditors, which found it more favorable than the proposal submitted by the Promoters, Avantha Holdings Ltd. The Committee of Creditors unanimously decided against pursuing the Promoters' proposal due to commercial viability concerns and ongoing examinations by government authorities.

The Tribunal noted that the Promoters' proposal was not in the prescribed format for withdrawal under the IBC regulations. Despite the slow progress, discussions were ongoing between the Committee of Creditors and NTPC regarding the revised Resolution Plan, showing potential for the resolution of the Corporate Debtor. In a meeting, the majority of the Committee of Creditors voted to seek an extension of the CIRP period until 15.06.2021.

The Tribunal reflected on a previous order where an extension was granted due to the corporate debtor's status as a going concern. However, the Tribunal expressed concern over the continuous extensions beyond the statutory limit of 330 days for completing the CIRP. The Tribunal criticized the slow progress and disregard for previous directives to complete the CIRP within the extended time frame.

In consideration of the circumstances, the Tribunal granted the extension of the CIRP until 30.06.2021, emphasizing the need for stakeholders to expedite the process. The Tribunal directed copies of the order to be sent to relevant parties for awareness and compliance. The application for extension was allowed with specific directions to expedite the CIRP process and ensure stakeholders' active involvement in the resolution proceedings.