2019 (10) TMI 54 - Tri - Insolvency and Bankruptcy

Admissibility of petition - initiation of CIRP - Time limitation - Section 12(2) and (3) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The present application by the RP under Section 12(2) of the Code is filed under instructions of the CoC by a vote of more than 66% of the voting share. Therefore, the conditions provided for by Section 12(2) of the Code are satisfied. We have also examined the minutes of the 3th meeting of CoC held on 08.05.2019 (agenda Item No. 9) and find that the Information Memorandum is stated to be prepared and Expression of Interest (EOI) if proposed to be issued. We are satisfied that the subject matter of the case is such that the CIRP cannot be completed within 180 days and we extend the period of CIRP by further 90 days from the date of expiry of 180 days computed from the date of admission of the petition under Section 9 of the Code. In the present case, we have granted extension of 90 days for completion of CIRP. Therefore, sufficient time is presently available for publishing form G, invitation of EOI and taking further steps for receipt of resolution plans and consideration of the resolution plans. The application for exclusion is therefore pre-mature and is not being examined presently and is not being presently acceded to. The RP should make determined efforts to ensure that the CIRP is completed within the extended time and in case of inability beyond his control, the RP will be at liberty to file application for exclusion which will then be considered on merits. Application disposed off.

Summary

Issues Involved:
1. Extension/Exclusion of time for running Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016.
2. Compliance with Section 12(2) of the Code and approval by the Committee of Creditors (CoC).
3. Consideration of exclusion of time for collating requisite record/information.
4. Granting extension of the statutory period for conducting the CIRP.
5. Examination of the need for exclusion of time beyond the granted extension.

Issue 1: Extension/Exclusion of Time for CIRP:
The Resolution Professional (RP) filed an application seeking extension/exclusion of time for running CIRP due to various delays and challenges faced during the process. The RP requested an extension of 90 days beyond the initial 180 days. The CoC approved the extension with a voting share of 79.2%. The Tribunal considered the RP's application, the minutes of the CoC meetings, and the necessity of the extension. The Tribunal extended the period of CIRP by a further 90 days from the expiry of the initial 180 days.

Issue 2: Compliance with Section 12(2) of the Code:
The RP's application under Section 12(2) of the Code was filed with the CoC's instructions by a vote of more than 66% of the voting share, meeting the conditions set out in the Code. The Tribunal examined the minutes of the CoC meeting and found that the Information Memorandum was prepared, and Expression of Interest (EOI) was proposed to be issued, necessitating the extension of the CIRP duration beyond 180 days. The Tribunal concluded that the CIRP could not be completed within 180 days and hence extended it by a further 90 days.

Issue 3: Consideration of Exclusion of Time for Record/Information Collation:
The RP sought exclusion of 120 days for time lost in collating necessary record/information during the CIRP process. The Tribunal acknowledged the challenges faced by the RP in obtaining information and preparing the Information Memorandum. However, the Tribunal did not grant the exclusion at that moment, instructing the RP to focus on completing the CIRP within the extended time. If completion becomes impossible due to uncontrollable circumstances, the RP can file for exclusion later for consideration.

Issue 4: Granting Extension of Statutory Period for CIRP:
The Tribunal noted the delays and challenges faced during the CIRP, including the delayed appointment of the RP and the lack of required information. Despite these hurdles, the RP progressed with preparing the Information Memorandum and planned to issue the EOI. The CoC approved the resolution for the RP to apply for extension, leading to the Tribunal granting a 90-day extension for the CIRP to be completed effectively.

Issue 5: Examination of Exclusion of Time Beyond Granted Extension:
The RP also requested exclusion of time, citing a previous judgment where exclusion was allowed. However, the Tribunal, having already granted a 90-day extension, deemed the exclusion request premature. The Tribunal advised the RP to focus on completing the CIRP within the extended period. If circumstances beyond the RP's control hinder completion, an exclusion application can be filed later for consideration based on merits.

In conclusion, the Tribunal granted the extension of the CIRP period by 90 days, emphasizing the need for the RP to diligently work towards completing the process within the extended timeframe and addressing any challenges promptly.