2020 (11) TMI 129 - Tri - Insolvency and Bankruptcy

Extension of 30 days beyond 270 days from Corporate Insolvency Resolution Process - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The very Objective of the IB Code is to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the priority of payment of government dues and to establish an Insolvency and Bankruptcy Fund, and matters connected herewith or incidental thereto. An effective legal framework for timely resolution of insolvency and bankruptcy would support development of credit markets and encourage entrepreneurship. It would also improve ease of doing business, and facilitate more investments leading to higher economic growth and development. Looking to the very object of IB Code, CoC desires to get extension of 30 days as there is every likelihood that some Resolution Plan will be accepted and/or approved by the CoC. In that event, a Corporate Debtor - However, the Supreme Court has observed that 330 days is the outer limit within which resolution of the stressed assets of the Corporate Debtor must take place. The application so filed by RP is allowed by extending 30 days from 13.08.2020 - Application disposed off.

Summary

Issues:
Extension of time under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 beyond 270 days from Corporate Insolvency Resolution Process.

Detailed Analysis:

Issue 1: Extension of Time under Section 60(5) of the Insolvency and Bankruptcy Code

The application, IA 469 of 2020, was filed by the Resolution Professional seeking an extension of 30 days beyond the initial 270 days from the Corporate Insolvency Resolution Process (CIRP). The applicant highlighted that two Resolution Plans were received, indicating a possibility of resolving the Corporate Debtor if more time was granted. The applicant argued that due to the lockdown and time constraints, evaluating and approving the plans within the existing timeframe was challenging.

Issue 2: Compliance with IB Code Objectives

The Tribunal emphasized the objective of the Insolvency and Bankruptcy Code to reorganize and resolve insolvency in a time-bound manner, aiming to maximize the value of assets, promote entrepreneurship, and balance stakeholder interests. Considering this objective, the Committee of Creditors (CoC) sought a 30-day extension to potentially accept a Resolution Plan, aligning with the Code's purpose of saving the Corporate Debtor as a going concern.

Issue 3: Judicial Precedent and Time Limit

While acknowledging the necessity of timely resolution, the Tribunal noted the Supreme Court's observation that 330 days serve as the outer limit for resolving stressed assets of a Corporate Debtor. In light of this, the Tribunal assessed the circumstances and concluded that extending the time within the 330-day limit could facilitate the success of a Resolution Plan applicant.

Conclusion:

In conclusion, the Tribunal allowed the application for an extension, granting an additional 30 days from the specified date. By extending the timeline within the permissible limit, the Tribunal aimed to enhance the chances of a successful Resolution Plan approval, aligning with the objectives of the Insolvency and Bankruptcy Code and safeguarding the interests of stakeholders involved in the Corporate Insolvency Resolution Process.