2022 (6) TMI 1215 - Tri - Insolvency and Bankruptcy

Seeking direction to respondents to provide the books of accounts and all the relevant information in respect of the Corporate Debtor - seeking direction to assist the IRP to identify the company assets - handing over the Keys of the factory gate and extension of all the support and cooperation to complete the CIR Process - HELD THAT - Independent of all the legal proceedings pending, the respondent preferred a proposal for One Time Settlement (OTS) before the Financial Creditor and also the Interim Resolution Professional appointed by this Tribunal. While the proposal for OTS preferred by the respondent was pending consideration with the Financial Creditor, the WP No. 15804 of 2022 was disposed off with a direction to the Resolution Professional to place the proposal before the Committee of Creditors (CoC) at the next meeting. Thereupon, the proposal for OTS has been sanctioned by the Financial Creditor and the same was communicated to the respondent vide letter dated 04/06/2022 issued by the Financial Creditor. In view of the OTS approved by the Financial Creditor, the respondent should be permitted to settle his entire liability towards the Financial Creditor within the time stipulated in the OTS. On going through the OTS proposal, which was approved by the Financial Creditor who has filed the CP(IB)/34(KOB)/2021, it is seen that the respondent can clear the liability to the Financial Creditor by 31/07/2022. It is also stated that if the claim of the Bank of Rs.105 lakh is paid as per the OTS approved, the Bank is ready to withdraw their claim before the CoC. It is also stated that if the Corporate Debtor delays the payment instalments, that will attract interest at the rate of 9% - Since the Corporate Debtor/Respondent has got time upto 31/07/2022, the prayer of the IRP to provide the books of accounts, and all the relevant information in respect of the Corporate Debtor, assist the IRP to identify the company assets, handover the Keys of the factory gate and extend all the support and cooperation to complete the CIR Process cannot be granted at present, as the Financial Creditor who has filed the case before this Tribunal has agreed to the OTS, presumably with the approval of CoC, the IRP has to wait till the cut off date provided in the OTS approval. Application dismissed.

Summary

Issues:
1. Application under Section 19(2) of the Insolvency and Bankruptcy Code, 2016 seeking relief related to Corporate Insolvency Resolution Process (CIRP).
2. Non-cooperation of Suspended Directors in providing information and assets of the Corporate Debtor.
3. Dispute regarding cash credit facility and personal guarantee executed by Respondent No. 1.
4. Review petition filed by Respondent against ex-parte order and subsequent One Time Settlement (OTS) proposal.
5. Approval of OTS by Financial Creditor and implications on the ongoing legal proceedings.
6. Decision on the application in light of the OTS approval and timeline for settlement.

Analysis:
1. The Tribunal received an application under Section 19(2) of the Insolvency and Bankruptcy Code, 2016, requesting the Respondents to provide necessary information and cooperate in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor. The Interim Resolution Professional (IRP) sought assistance in identifying company assets and completing the CIR process. However, the Respondents failed to comply with the requests, leading to the application before the Tribunal.

2. The Respondents, particularly the Suspended Directors, were accused of non-cooperation in handing over essential details and assets of the Corporate Debtor. Despite requests from the IRP, the Respondents did not facilitate the process, causing hindrance to the resolution proceedings.

3. A dispute arose concerning a cash credit facility availed by Respondent No. 1 from a Financial Creditor, including the execution of a loan agreement, mortgage of assets, and personal guarantee. Respondent No. 1 cited health issues as a reason for inability to manage the company affairs effectively.

4. Respondent's legal history involved a review petition against an ex-parte order and subsequent submission of a One Time Settlement (OTS) proposal. The Respondent sought to settle the liabilities with the Financial Creditor through the OTS, which was approved after legal proceedings and High Court intervention.

5. The approval of the OTS by the Financial Creditor had significant implications on the ongoing legal proceedings and the resolution process. The terms of the OTS included a structured repayment plan and conditions for withdrawal of claims and legal actions, impacting the resolution timeline and creditor agreements.

6. Considering the approval of the OTS and the timeline provided for settlement, the Tribunal dismissed the application, allowing the IRP to take necessary steps if the OTS failed or was not honored by the Respondent. The decision was based on the understanding that the Financial Creditor's approval of the OTS indicated a potential resolution of the outstanding liabilities within the specified timeframe.