2022 (2) TMI 669 - Tri - Insolvency and Bankruptcy

Seeking extension of CIRP for a further period of 60 days beyond 270 days - two resolution plans submitted by Resolution Applicants were rejected by Committee of Creditors(CoC) and two fresh resolution plans are pending consideration by the CoC - Whether extension of time beyond 270 days by way of second extension can be granted, when there is no concrete resolution plan before CoC for its consideration? - HELD THAT - This application is filed for extension of period for 60 days for completion of CIRP, anticipating receipt of some plans for the resolution of the Corporate Debtor. The record before us reveals that the RP had taken one-time extension earlier. However, till date, no plan has been accepted for resolution and the RP wants to start the process afresh after expiry of 270 days - Section 12 of the Code mandates that the CIRP of a Corporate Debtor must conclude within 330 days from the insolvency commencement date. This period of 330 days includes (a) normal CIRP period of 180 days, (b) one-time extension, if any, up to 90 days of such CIRP period granted by the Adjudicating Authority, and (c) the time taken in legal proceedings in relation to the CIRP of the CD. In the instant case, this Tribunal already granted one extension of 90 days besides excluding 45 days in the wake of covid induced lockdown. The resolution professional in this case, failed in placing any other concrete plan for resolution of the Corporate Debtor within the timeline of 270 days, as such, it is difficult for the Adjudicating Authority to accept the request of the RP for an extension of 60 days to start the entire process afresh, on the ground that the RP received an enquiry from one Mrs. Butta Renuka, Promoter of MSME enterprise - there are no purpose in extending the time for another 60 days. It is needless to say that this order does not prevent the Liquidator to sell the Corporate Debtor as a going concern within 90 days during liquidation, as enshrined in the IBC Rules, 2016. Taking into consideration the fact that the IBC timelines are to be strictly followed, especially during Corporate Insolvency Resolution Process (CIRP), it is firmly concluded that this is not a fit case to grant time. Application dismissed.

Summary

Issues:
1. Application for extension of Corporate Insolvency Resolution Process (CIRP) period beyond 270 days.
2. Consideration of extension request in absence of concrete resolution plans before Committee of Creditors (CoC).

Analysis:
1. The Tribunal was approached with an application under Section 12(2) of the Insolvency and Bankruptcy Code, 2016, seeking an extension of the CIRP period for a further 60 days beyond the initial 270 days. The request was based on the rejection of two resolution plans by the CoC and the pending consideration of two fresh plans. The Tribunal had previously admitted the company petition and extended the CIRP period due to lockdown, with the current application being the second extension request.

2. The key issue for consideration was whether a second extension beyond 270 days could be granted in the absence of concrete resolution plans before the CoC. The Tribunal noted that the RP had not been able to present any accepted resolution plan within the stipulated timeline. Despite the RP's anticipation of receiving new plans, the lack of progress in the resolution process was evident.

3. The Tribunal highlighted that as per Section 12 of the Code, the CIRP of a Corporate Debtor must conclude within 330 days from the insolvency commencement date. This includes the normal CIRP period of 180 days, one-time extensions of up to 90 days, and time spent in legal proceedings related to the CIRP. Emphasizing the importance of timely insolvency proceedings, the Tribunal referred to a Supreme Court observation regarding the value preservation of the debtor's assets and the need for efficient resolution processes.

4. Upon reviewing the minutes of the CoC meeting, the Tribunal found that no concrete resolution plan had been put forth within the 270-day timeline. The RP's request for a further 60-day extension to restart the process was deemed unnecessary, especially considering the lack of progress in resolving the Corporate Debtor's situation. The Tribunal underlined the strict adherence to IBC timelines during CIRP and concluded that the circumstances did not warrant granting additional time.

5. Consequently, the Tribunal dismissed the application for extension, directing the Resolution Professional to proceed with a liquidation application promptly. The decision was grounded in the necessity of following statutory timelines and ensuring the effective handling of insolvency proceedings within the framework of the law.