2021 (5) TMI 236 - AT - Insolvency and Bankruptcy

Permission for withdrawal of appeal - appellant case is that Appeal may be allowed to be withdrawn with liberty to seek restoration in case the effort with regard to Section 12 A of IBC runs into difficulty - HELD THAT - There are no reason to doubt that the Adjudicating Authority without standing on technicalities would pass appropriate Orders, if settlement has taken place between the Original Operational Creditor and Corporate Debtor and CoC is not yet constituted. The Appeal is permitted to be withdrawn with liberty to seek restoration of the Appeal in case at any future time the effort to settle in terms of Section 12A of IBC runs into difficulty and does not happen.

Summary

Issues:
1. Admission of application under Section 9 of Insolvency and Bankruptcy Code, 2016 (IBC) against the Corporate Debtor.
2. Settlement between the Appellant and the Operational Creditor.
3. Application for withdrawal under Section 12A of IBC.
4. Violation of moratorium by the Corporate Debtor.
5. Constitution of Committee of Creditors (CoC).

Analysis:

1. The Appellant, as the Director of the Suspended Board of the Corporate Debtor, appealed against the admission of an application under Section 9 of IBC by the Operational Creditor. The settlement between the parties led to the filing of an Application for withdrawal under Section 12A of IBC, supported by the Respondent and the Interim Resolution Professional (IRP). The IRP reported a violation of the moratorium due to the payment made during the settlement process.

2. The settlement was acknowledged by all parties involved, including the Appellant, the Operational Creditor, and the IRP. The Appellant's Counsel requested the withdrawal of the Appeal, with the possibility of seeking restoration if difficulties arose during the settlement process under Section 12A of IBC. The absence of a constituted Committee of Creditors (CoC) was also noted during the proceedings.

3. The Tribunal, considering the objectives of IBC, allowed the withdrawal of the Appeal with liberty to restore it if needed in the future. It emphasized that the Adjudicating Authority would act appropriately if a settlement had indeed occurred between the parties and the CoC was not yet established. The decision highlighted the importance of not hindering the settlement process under Section 12A of IBC and directed that the CoC should not be constituted until the Adjudicating Authority decided on the relevant application.

4. In conclusion, the Appeal was disposed of with the mentioned observations and directions, emphasizing the importance of facilitating settlements under IBC without unnecessary technicalities, ensuring that the interests of all parties involved are considered and protected throughout the insolvency resolution process.