2019 (2) TMI 964 - Tri - Insolvency and Bankruptcy

Resolution Plan submission - necessary time period to enable the investor to submit the Resolution Plan - Held that - Main objective of the Code is for Resolution of the Corporate Debtor rather than liquidation. If the liquidation is ordered that too when the liquidation value is very meagre, nobody will gain. Considering the primary objective of the Code which prefers Resolution of any Corporate Debtor even at the remotest of possible opportunity, yes, this Bench is certainly inclined to afford an opportunity to the investor identified by the Applicant Association to submit the Resolution Plan even at the cost of excluding the time periods that got wasted in waiting for prospective investors, if at all he is eligible and financially sound in accordance with the real spirit of the Code. Accordingly the investor may file an appropriate application on or before 07.01.2019 with details of its net worth so that further directions will be given in this matter in this regard. It is made very clear that the Resolution Plan has to be submitted only by the Investor and not by the Applicant Association. In order to enable the investor to submit the Resolution Plan (if he otherwise eligible), it is necessary that time period has to be either extended or time period from the date of filing of this application till the date of disposal of this application is to be excluded from the CIRP process. However, under the Code it is not possible to extend the 270 days period and hence this Bench is inclined to exclude the period from the date of filing this Application (19.12.2018) till the disposal of this Application from the CIRP period, so that above said investor or any other investor can submit their resolution plan which would revive the hopes of keeping the aspirations of workers, creditors and above all in the public interest. List this matter on 08.01.2019 for filing appropriate application by the above said investor and the said investor is directed to provide the details of net worth etc. to the Resolution Professional on or before 07.01.2019 so that the Resolution Professional can verify the eligibility of the proposed investor. Further the Resolution Professional is directed to maintain a regular contact with the other UK investor who interacted with him and exchange the necessary details as per the Code if they satisfy the eligibility criteria.

Summary

Issues:
1. Application by unregistered employees union seeking reliefs for submitting a Resolution Plan.
2. Committee of Creditors' decision to liquidate the Company due to lack of resolution plans.
3. Employees association's attempt to revive the Company and prevent liquidation.
4. Concerns about the impact of liquidation on creditors, workmen, and valuable resources.
5. Eligibility and financial soundness of potential investors for submitting a Resolution Plan.
6. Interpretation of the primary objective of the Insolvency and Bankruptcy Code (Code) in favor of resolution over liquidation.
7. Exclusion of time period for waiting for prospective investors and extension of CIRP process for submitting Resolution Plan.

Analysis:
1. The Application filed by an unregistered employees union sought various reliefs, including the opportunity to present a Resolution Plan for the Corporate Debtor, prevent liquidation without their input, and access to information for plan preparation. The Tribunal acknowledged the application filed near the end of the Corporate Insolvency Resolution Process (CIRP) period.

2. The Committee of Creditors had decided to liquidate the Company due to the absence of any resolution plans despite expressions of interest. The debt of the Corporate Debtor was substantial, and the plant was operating below capacity due to working capital constraints, leading to cash losses.

3. The employees association aimed to revive the Company, emphasizing the quality of its products and the potential negative impact of liquidation on creditors and workmen. The Tribunal considered the seriousness of the workers' efforts and the potential wastage of valuable resources in case of liquidation.

4. The Tribunal deliberated on the eligibility and financial resources of potential investors, emphasizing the need for a Resolution Plan submission by a qualified investor rather than the Applicant Association. Various parties expressed concerns and support for different investors interested in submitting plans.

5. The Tribunal referred to a Supreme Court judgment highlighting the importance of preserving the Corporate Debtor as a going concern and favoring resolution over liquidation. It emphasized affording opportunities to investors who can continue business operations.

6. In line with the primary objective of the Code favoring resolution, the Tribunal inclined towards giving the identified investor a chance to submit a Resolution Plan, excluding the time period spent waiting for prospective investors.

7. To facilitate the Resolution Plan submission by the investor, the Tribunal considered excluding the period from the application filing date until its disposal from the CIRP process. Directions were given for the investor to file an appropriate application and provide necessary details for verification by the Resolution Professional.

This detailed analysis of the judgment showcases the Tribunal's considerations regarding the Application, Committee of Creditors' decision, revival efforts, investor eligibility, Code interpretation, and procedural steps for Resolution Plan submission.