2020 (10) TMI 268 - Tri - Insolvency and Bankruptcy

Exclusion of period of 103 days from CIRP period - exclusion sought on the ground that an application against RP, challenging the admission of claims of SASF and for revision in the voting rights among the members of CoC was filed and was first listed for hearing on 01.11.2019 and the same was reserved for orders on 11.02.2020. HELD THAT - As the process of CIRP was restrained on account of disputes regarding voting share amongst the members of CoC which required adjudication by this Adjudicating Authority, the instant case will squarely fall within the category of unforeseen circumstances which have adversely impacted the CIRP process. As submitted by RP a Resolution Plan is ready to be voted upon by the members of CoC, and if the exclusion for the period as prayed for is not allowed, the Corporate Debtor will be driven to liquidation. Considering the exceptional circumstances of this case, this Adjudicating Authority is satisfied with the reason as mentioned and therefore deems it proper to grant an exclusion of 102 days from the CIRP period, as this will be in the interest of all the stakeholders of the Corporate Debtor - Application allowed.

Summary

Issues:
1. Exclusion of time period in the Corporate Insolvency Resolution Process (CIRP) due to disputes regarding voting share among Committee of Creditors (CoC).

Analysis:
1. The judgment dealt with an interlocutory Application filed by the Resolution Professional seeking exclusion of 103 days from the CIRP process under section 12(2) of the Insolvency and Bankruptcy Code, 2016. The RP requested the exclusion due to disputes regarding voting share among CoC members, impacting the Resolution Plan consideration.
2. The Adjudicating Authority had admitted the application under section 7 of the IBC, 2016 and appointed an Interim Resolution Professional (IRP) who later became the Resolution Professional. CoC meetings approved Expression of Interest (EoI) and directed RP to invite Resolution Plans from prospective Resolution Applicants.
3. A CoC member filed an application challenging the admission of claims and sought revision in voting rights, affecting the voting pattern. The matter was pending before the Adjudicating Authority, leading to uncertainty in the voting share among CoC members.
4. The RP sought exclusion based on the ground that the application challenging voting rights was listed for hearing on 01.11.2019 and reserved for orders on 11.02.2020. The RP relied on a precedent regarding grounds for exclusion in CIRP timelines.
5. The Hon'ble NCLAT precedent highlighted various grounds for exclusion, including unforeseen circumstances impacting the CIRP process. The judgment applied parameter (vi) of the precedent, considering the voting share dispute as an unforeseen circumstance affecting the CIRP timeline.
6. The Adjudicating Authority found the RP's request justified, as not granting exclusion could lead to liquidation. Therefore, the exclusion of 102 days from the computation of 330 days for completing the CIRP process was allowed to ensure the interests of all stakeholders.
7. The judgment directed the RP to complete the CIRP process within the revised timeline, failing which liquidation proceedings would commence. The Application seeking exclusion of time was disposed of accordingly, emphasizing the importance of timely resolution in insolvency matters.