Time-limit for completion of Insolvency Resolution Process [ Section 12 ] - Insolvency Resolution And Liquidation For Corporate Persons - IBC

Time-limit for completion of insolvency resolution process Time Limit to complete corporate insolvency resolution process [ Section 12(1) ] Subject to section 12(2), the corporate insolvency resolution process shall be completed within a period of 180 days from the date of admission of the application to initiate such process. Voting Share required to extend the time limit for completion of CIRP [ Section 12(2) ] The resolution professional shall file an application to the Adjudicating Authority to extend the period of the corporate insolvency resolution process beyond 180 days , if instructed to do so by a resolution passed at a meeting of the committee of creditors by a vote of 66% of the voting shares. Extension of time of not exceeding 90 days [ Section 12(3) ] On receipt of an application under section 12(2), if the Adjudicating Authority is satisfied that the subject matter of the case is such that corporate insolvency resolution process cannot be completed within 180 days, it may by order extend the duration of such process beyond one hundred and eighty days by such further period as it thinks fit, but not exceeding 90 days. Extension of time only once First proviso Provided that any extension of the period of corporate insolvency resolution process under this section shall not be granted more than once. Mandatory completion of CIRP within 330 days Second Proviso Provided further that the corporate insolvency resolution process shall mandatorily be completed within a period of 330 days from the insolvency commencement date, including any extension of the period of corporate insolvency resolution process granted under this section and the time taken in legal proceedings in relation to such resolution process of the corporate debtor. M a n d a t o r y c o m p l e t i o n o f CIRP within 90 days from the date of commencement of Amendment Act of 2019 Third Proviso Provided also that where the insolvency resolution process of a corporate debtor is pending and has not been completed within the 330 days referred in the second proviso, such resolution process shall be completed within a period of 90 days from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019. Judicial Interpretation of section 12 by Supreme Court Innoventive Industries Ltd. Vs. ICICI Bank Anr. SC, dated 31.08.2017 Time is of essence in seeing whether the corporate body can be put back on its feet, so as to stave off liquidation. M/S. SURENDRA TRADING COMPANY VERSUS M/S. JUGGILAL KAMLAPAT JUTE MILLS COMPANY LIMITED AND OTHERS - SC dated 19.09.2017 The statutory scheme laying down time limits sends a clear message that time is the essence of the Code Arcelormittal India Pvt. Ltd. Vs. Satish Kumar Gupta Ors . SC, dated 04.10.2018 Section 12, construed in the light of the object sought to be achieved by the Code, and in the light of the consequence provided by section 33, makes it clear that the periods mentioned are mandatory and cannot be extended. Regulation 40A of the CIRP Regulations presents a model timeline of the CIRP, and it is of utmost importance for all authorities concerned to follow this model timeline as closely as possible. Committee of Creditors of Essar Steel India Ltd. Vs. Satish Kumar Gupta Ors . SC date 15.11.2019 While leaving the provision otherwise intact, the term mandatorily was struck down from second proviso to section 12(3), as being manifestly arbitrary under Article 14 of the Constitution and as being unreasonable restriction on the litigant s right to carry on business under Article 19(1)(g) of the Constitution. The effect of this declaration is that ordinarily the time taken in relation to the CIRP must be completed within the outer limit of 330 days from the insolvency commencement date, including extensions and the time taken in legal proceedings. If the delay or a large part thereof is attributable to the tardy process of the AA and/or the NCLAT itself, it may be open in such cases for the AA and/or NCLAT to extend time beyond 330 days. Committee of Creditors of Trading Engineers International Ltd. Vs. Trading Engineers International Ltd. through RP NCLAT dated 02.02.2021 The extension of CIRP period beyond 330 days was allowed to prevent the CD from being pushed into liquidation and a viable resolution plan being approved by the CoC.