2022 (7) TMI 197 - Tri - Insolvency and Bankruptcy

Time Limitation - Seeking the exclusion of 147 days from 10.12.2021 (visit of registered office by RP) to 07.05.2022 (statutory auditor provided some financial information) from the CIRP period of 180 days as envisaged under IBC on account of time consumed due to non cooperation by the suspended directors and management of the corporate debtor - HELD THAT - The Applicant/Resolution Professional could not function because of non-cooperation of the Promoters of the Corporate Debtor. The records were not supplied to applicant nor the management was handed over to the applicant, moreover the whereabouts of the corporate debtor is not known corporate debtor is maintaining a dummy registered office - it is observed that the applicant had made all the possible endeavours in discharging his duties as a resolution professional and after the documents from the statutory auditor were received, the applicant is in a position to run the Corporate insolvency resolution process of the corporate debtor including preparation of the information memorandum, invite expression of Interest and other duties as envisaged in the code. The exclusion of 147 days is allowed for the purpose of counting the period of 'Corporate Insolvency Resolution Process' of 180 days from 10.12.2021 (visit of registered office by RP) to 07.05.2022 (statutory auditor provided some financial information) from the CIRP period of 180 days as envisaged under IBC on account of time consumed due to non cooperation by the suspended directors to enable the 'Resolution Professional'/'Committee of Creditors' to complete the 'Corporate Insolvency Resolution Process'. Petition allowed.

Summary

Issues:
Exclusion of time from CIRP period due to non-cooperation by suspended directors and management.

Analysis:
The interlocutory application was filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking the exclusion of 147 days from the CIRP period of 180 days due to non-cooperation by the suspended directors and management of the corporate debtor. The Resolution Professional faced challenges in obtaining necessary information and documents to carry out his duties effectively. Despite efforts to contact the suspended directors and former employees, no cooperation was received, hindering the preparation of the information memorandum and running the CIRP process.

The Tribunal noted that the Applicant could not function properly due to the non-cooperation of the Promoters of the Corporate Debtor. Essential records were not provided, management was not handed over, and the whereabouts of the corporate debtor remained unknown, indicating a lack of cooperation and compliance. However, after receiving documents from the statutory auditor, the Applicant was able to progress in running the CIRP process, including preparing the information memorandum and inviting expressions of interest.

Considering the circumstances and to ensure justice, the Tribunal allowed the exclusion of 147 days from the CIRP period of 180 days. This exclusion was granted from the date of the visit to the registered office by the Resolution Professional to the date when the statutory auditor provided some financial information. This decision aimed to facilitate the Resolution Professional and Committee of Creditors in completing the Corporate Insolvency Resolution Process effectively. The Resolution Professional was directed to expedite the CIRP process and submit quarterly status reports on the progress made.

Ultimately, the interlocutory application was allowed without any orders on costs. The Tribunal ordered the service of the order copy to the relevant parties and consigned the file to records for further action.