2020 (9) TMI 10 - Tri - Insolvency and Bankruptcy

Exclusion of certain period from Corporate Insolvency Resolution Process - Section 12 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - On perusal of the record it is found that CP (IB) 594 of 2018 was admitted by this Adjudicating Authority on 26.04.2019 and further, 90 days beyond 180 days was extended on 22.10.2019. The RP has moved this application for seeking exclusion for certain days as there is high probability of approval and/or acceptance of proposed Resolution Plan and thereby, the Corporate Debtor can be saved as a going concern. Looking to the very object of IB Code, CoC desires to get exclusion of certain period from the CIRP as there is every likelihood that some Resolution Plan will be accepted and/or approved by the CoC. In that event, a Corporate Debtor will be saved from Liquidation and more so, livelihood of number of employees' dependent on the Corporate Debtor will also be saved. A similar view is reiterated by the Hon'ble Supreme Court in Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta and Ors. 2019 (11) TMI 731 - SUPREME COURT observed that even an extension beyond 330 days' timeline as specified in the IB Code can be granted by the Adjudicating Authority under exceptional circumstances. Under the given facts and circumstances as stated, if the time is extended within the outer limit of 330 days, there is every likelihood that some Resolution Applicant may succeed for its acceptance and approval - the application so filed by RP is allowed by excluding 41 i.e. 10 days from the date of admission of the Petition till the order being served upon the IRP, 17 days from stay on conducting CoC meeting and 15 days from the filing of the instant application till its pronouncement. Application allowed.

Summary

Issues:
Exclusion of period from Corporate Insolvency Resolution Process (CIRP) under Section 12 of the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. Application for Exclusion of Period:
The application, IA 67 of 2020, was filed by the Resolution Professional of the Corporate Debtor seeking an exclusion of a certain period from the Corporate Insolvency Resolution Process (CIRP) under Section 12 of the Insolvency and Bankruptcy Code, 2016.

2. Background of the Case:
The Operational Creditor had initiated the CIRP, appointing an Interim Resolution Professional (IRP). Various litigations during the CIRP period led to delays in the process, including a stay on conducting Committee of Creditors (CoC) meetings. The Resolution Professional (RP) took charge after changes in the IRP, and the period for resolution was extended beyond the initial 180 days.

3. Objective of the Insolvency and Bankruptcy Code:
The judgment emphasized the objective of the Insolvency and Bankruptcy Code to maximize the value of assets, promote entrepreneurship, and balance stakeholders' interests. It highlighted the focus on revival and continuation of the corporate debtor to prevent liquidation.

4. Legal Precedents and Observations:
Citing legal precedents, the judgment referred to the discretion of the Adjudicating Authority to extend the timeline for resolution under exceptional circumstances. The Supreme Court's observations emphasized that the primary focus is on the revival of the corporate debtor to prevent liquidation.

5. Decision and Findings:
Considering the circumstances and the likelihood of a successful Resolution Plan, the Tribunal allowed the application for exclusion of a specific period from the CIRP. The exclusion included days from the admission of the petition to the pronouncement of the order, ensuring a total of 41 days were excluded.

6. Conclusion:
The judgment concluded by disposing of the instant application, allowing the exclusion of the specified period to facilitate the resolution process and potentially save the Corporate Debtor from liquidation. The decision aligned with the objective of the Insolvency and Bankruptcy Code to promote the revival of distressed entities.