2019 (6) TMI 1406 - Tri - Insolvency and Bankruptcy

Tribunal denies time extension in CIRP, orders liquidation over inadequate Resolution Plan value.

The National Company Law Tribunal Division Bench, Chennai, dismissed the application for exclusion of time period from the Corporate Insolvency Resolution ... Liquidation order - Extension of CIRP - exclusion of 43 days from the total time period of 270 days of CIRP - HELD THAT:- Since the CoC has not been restrained by the Adjudicating Authority or by any external agency from taking a decision over the Resolution Plan pending before the CoC, the facts herein do not deserve either for exclusion of CIRP period or for extension of CIRP period as prayed in this application. It is a fit case for liquidation on two grounds- (i) CIRP Period of 270 days is over (ii) even in the event of liquidation is ordered, it is still open to the Liquidator to sell the Corporate Debtor as a going concern. Normally, the Resolution Plan is viable if the Resolution Plan Value is more than Liquidation Value, in this case, one - Plan is not approved by the CoC till date, two - the Resolution Plan value is far below to the liquidation value, three - not taking a decision by the CoC without any reason will not become a reason for exclusion of the time period from the CIRP period. Besides this, CoC has not even passed a resolution seeking exclusion or extension of time as prayed by the Resolution Professional. This application for exclusion is hereby dismissed. Issues: Application for exclusion of time period from CIRP and extension of CIRPIn the judgment delivered by the National Company Law Tribunal Division Bench, Chennai, the issues revolved around the application moved by the Resolution Professional of a company seeking exclusion of 43 days from the total time period of 270 days of Corporate Insolvency Resolution Process (CIRP) and extension of CIRP for a further period of 43 days. The key contention was the failure of the Committee of Creditors (CoC) to make a decision on the Resolution Plan within the stipulated time frame, leading to the expiry of the CIRP period.The Tribunal noted that the Resolution Plan presented to the CoC had a value significantly lower than the liquidation value of the Corporate Debtor. Despite being requested to revise the plan, the Resolution Applicant only raised the amount marginally, still falling short of the liquidation value. The CoC, instead of making a decision on the plan, requested more time but failed to reach a resolution within the CIRP period, which expired on 28.04.2019.Based on the facts presented, the Tribunal concluded that since the CoC was not prevented by any authority from deciding on the Resolution Plan, there were no grounds for excluding or extending the CIRP period as requested. Consequently, the Tribunal deemed it appropriate to dismiss the application for exclusion, leaving room for the Resolution Professional to pursue further actions within the legal framework.The Tribunal further emphasized that the circumstances warranted liquidation for two primary reasons: the expiration of the 270-day CIRP period and the inadequacy of the Resolution Plan value compared to the liquidation value. It was highlighted that the CoC's failure to approve a viable Resolution Plan, coupled with their inaction without justification, did not justify altering the CIRP timeline. Additionally, the CoC did not pass any resolution seeking exclusion or extension of time, further solidifying the decision to dismiss the application for exclusion.In conclusion, the Tribunal dismissed the application for exclusion, signaling a fit case for liquidation based on the grounds of the expired CIRP period and the unsatisfactory Resolution Plan value. The judgment underscored the importance of timely and informed decision-making by the CoC in insolvency proceedings to ensure the efficient resolution of corporate debts.