2021 (8) TMI 326 - Tri - Insolvency and Bankruptcy

Seeking exclusion of period of 312 days (i.e. 25.03.2020 to 31.01.2021 being the period of lockdown imposed by the Central Government and State Government in the wake of Covid-19 outbreak from the period stipulated for completion of liquidation - seeking extension of 90 days from 01.02.2021 (i.e. 270 days when calculated from 05.08.2020) as per Regulation 44(2) of the IBBI (Liquidation Process) Regulations 2016, after excluding the Covid Lock down period - HELD THAT - It is to be noted here that the Regulation which was prevalent at the time of passing the Liquidation Order mandates the Liquidation process to be completed within a period of 2 years and as such the liquidation process in relation to the Corporate Debtor is required to be completed on or before 05.08.2020. However, the Liquidator not being in a position to complete the process and under the circumstances, the Liquidator has filed the present Application under Regulation 44(2) of IBBI (Liquidation Process) Regulations, 2016 (amended upto 15.12.2016) for continuation of the Liquidation period of the Corporate Debtor for a further period of one year. Regulation 44(2) of IBBI (Liquidation Process) Regulations, 2016, as it stood at the time of passing the Liquidation order, is taken into consideration for the facts of the present case and it contemplates that if the liquidator has failed to liquidate the Corporate Debtor within two years then he has to make an application to the Adjudicating Authority to continue such liquidation, along with a report explaining why the liquidation has not been completed specifying the additional time that shall be required for completion of the liquidation. By taking into consideration all the facts, this Authority feels that it is just and proper to extend the Liquidation period for a further period of 90 days and as such the Liquidation period of the Corporate Debtor is extended for a period of 90 (ninety) days from the date of this Order and the Liquidation process in relation to the Corporate Debtor is required to be completed on or before 14.10.2021. Further, the Liquidator shall make every endeavour to complete the liquidation process within the extended period and not to seek for any further extension. Application allowed.

Summary

Issues:
- Extension of liquidation period due to Covid-19 lockdown
- Compliance with regulations for completion of liquidation process

Extension of Liquidation Period due to Covid-19 Lockdown:
The Liquidator of a company filed an Application seeking an extension of the liquidation period due to delays caused by the Covid-19 pandemic and associated lockdowns. The Liquidator had been unable to complete the liquidation process within the stipulated two years as required by Regulation 44 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The Liquidator highlighted that various assets of the company were yet to be sold, including land, building, and machinery. Additionally, legal proceedings were pending against another company for non-completion of job work. The Liquidator relied on Regulation 47A, which excludes the lockdown period for computation of timelines in the liquidation process. The Tribunal considered these factors and extended the liquidation period by 90 days, emphasizing that the Liquidator must make every effort to complete the process within this extended timeframe and adhere to the model timelines prescribed by the IBBI.

Compliance with Regulations for Completion of Liquidation Process:
The Tribunal noted that the original Regulation 44(2) of the IBBI (Liquidation Process) Regulations, 2016 required the liquidation of the corporate debtor to be completed within two years. As the Liquidator failed to meet this deadline due to the Covid-19 pandemic and lockdowns, an application was made for an extension under Regulation 44(2). The Tribunal considered the circumstances, including the unsuccessful e-auctions and the impact of the pandemic on the liquidation process. Referring to the amended Regulation 47A, which excludes the lockdown period for timeline computation, the Tribunal granted a further extension of 90 days for the completion of the liquidation process. The Liquidator was directed to strictly adhere to the extended timeline and complete all tasks as per the IBBI regulations, with a deadline set for the completion of the process. The Tribunal allowed the application for extension, emphasizing the importance of timely completion of the liquidation process within the granted extension period.