2024 (2) TMI 873 - AT - Insolvency and Bankruptcy

Extension of the CIRP period of the Corporate Debtor by 60 days - Directing Issuance of fresh Form-G in the CIRP of the Corporate Debtor - CoC had already decided against this course of action - HELD THAT - Despite lapse of four years, no resolution had fructified so far. Inspite of issue of Form G on five occasions, no viable resolution plans had cropped up compelling the CoC to recommend liquidation of the Corporate Debtor. However, on an application filed by the Appellant seeking consideration of their Resolution Plan, the Adjudicating Authority taking note that the object of the IBC is to rescue the Corporate Debtor in distress allowed the consideration of the Resolution Plan of the Appellant on 16.01.2023. The subsequent decision of the Adjudicating Authority on 08.02.2023 to recall its order of 16.01.2023 was set aside by this Tribunal. This Tribunal on 25.04.2023 taking note of the fact that Resolution Plan of the Appellant was already submitted and the majority member of the CoC holding 86% share had expressed its no objection to consider the same, allowed consideration of the Resolution Plan of the Appellant. The decision of the CoC not to issue fresh Form-G has been also canvassed by the Learned Counsels of the Appellant, RP and Union Bank of India. It has been contended by them that fresh publication of Form-G would run counter to the stringent time lines prescribed by the IBC for completion of the CIRP process - when a resolution plan has already been received by the CoC and the CoC in the exercise of its commercial wisdom has decided to only consider this plan, allowing other potential resolution applicants by the Adjudicating Authority to paradrop afresh at this stage when CIRP period is over and that too contrary to the deliberations of the CoC cannot be countenanced. Ultimately it is the commercial wisdom of the CoC which operates to approve what is to be the best resolution plan. The Adjudicating Authority with the limited powers of judicial review available to it cannot substitute its views with the commercial wisdom of the CoC. In view of the above, the Adjudicating Authority has committed an error in directing the issuance of fresh Form-G while allowing the extension of the CIRP by 60 days when the CoC had deliberated at length on this issue and had decided against the option of having other potential resolution applicants from joining the fray. That part of the impugned order is set aside wherein the Adjudicating Authority has directed the RP to invite fresh expression of interest through wider publication of Form-G - that part of the impugned order is affirmed wherein the period of CIRP has been extended by 60 days - application disposed off.

Summary

Issues Involved:
1. Whether the Adjudicating Authority was justified in directing the issuance of fresh Form-G.
2. Whether the extension of the CIRP period by 60 days was appropriate.

Summary:

Issue 1: Justification of Issuance of Fresh Form-G

The Adjudicating Authority directed the Resolution Professional (RP) to issue a fresh Form-G to invite Expressions of Interest (EOIs) from other resolution applicants, which was beyond the relief prayed for. The Appellant contended that this direction was not in consonance with the commercial wisdom of the Committee of Creditors (CoC), which had already decided against issuing fresh Form-G to avoid unnecessary delays. The CoC, with a 97.56% vote share, had resolved to extend the Corporate Insolvency Resolution Process (CIRP) period solely for the consideration and voting on the Resolution Plan submitted by the Appellant. The CoC had also noted that the Resolution Plan of the Appellant was of higher value compared to the plans submitted by earlier resolution applicants. The Tribunal emphasized that the commercial wisdom of the CoC should be given paramount status without judicial intervention, as reaffirmed by the Hon'ble Supreme Court in various judgments. The Tribunal held that the Adjudicating Authority committed an error in directing the issuance of fresh Form-G, as it ran contrary to the commercial wisdom of the CoC and the stringent timelines prescribed by the Insolvency and Bankruptcy Code (IBC).

Issue 2: Extension of CIRP Period

The Adjudicating Authority extended the CIRP period by 60 days to enable the completion of the resolution process. The Tribunal affirmed this part of the order, noting that the CoC had already resolved to seek an extension of the CIRP period by 60 days to consider and vote on the Resolution Plan submitted by the Appellant. The Tribunal directed the RP to place the Resolution Plan of the Appellant before the CoC for consideration and voting and to complete the CIRP within the extended period.

Conclusion:

The Tribunal set aside the part of the impugned order directing the issuance of fresh Form-G and affirmed the extension of the CIRP period by 60 days. The RP was directed to place the Resolution Plan of the Appellant before the CoC for consideration and voting. The appeal was allowed with the aforesaid observations.