Tribunal Excludes Lockdown Period from CIRP Timeline, Upholding Creditor Committee Resolution

The Tribunal granted the Resolution Professional's application to exclude the period between 05.05.2020 and 31.10.2020, encompassing a 3-week court stay, from the Corporate Insolvency Resolution Process timeline due to the Covid-19 lockdown. The Committee of Creditors unanimously resolved to exclude this period, supported by Regulation 40C of the IBBI Regulations. The Tribunal recognized the lockdown's impact on CIRP activities, allowing the exclusion of 179 days. The decision aimed to ensure compliance with the Insolvency and Bankruptcy Code, facilitating the timely completion of the Corporate Debtor's resolution process.

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Issues:
1. Exclusion of time period between 05.05.2020 and 31.10.2020 from Corporate Insolvency Resolution Process (CIRP) due to lockdown.

Analysis:
The Resolution Professional filed an application seeking exclusion of the period between 05.05.2020 and 31.10.2020, including a 3-week stay granted by the High Court, from the CIRP timeline of the Corporate Debtor under the Insolvency and Bankruptcy Code, 2016. The application highlighted that the lockdown due to the Covid-19 pandemic hindered the completion of CIRP activities within the prescribed timelines. The Corporate Insolvency Resolution Process was initiated on 05.05.2020, and various events, including the appointment of the Resolution Professional and meetings of the Committee of Creditors (COC), were affected by the lockdown.

The COC, with 100% voting power, passed a resolution to exclude the lockdown period from the CIRP timeline. The Applicant relied on Regulation 40C of the IBBI Regulations, which allows for the exclusion of the lockdown period from CIRP timelines. The Applicant presented government orders to support the claim that the lockdown was in effect during the period for which exclusion was sought. The Applicant emphasized the necessity of excluding the period to ensure compliance with the Code and timely completion of the CIRP.

Considering the submissions and regulatory provisions, the Tribunal acknowledged the impact of the lockdown on CIRP activities and allowed the exclusion of the period from 05.05.2020 to 31.10.2020, totaling 179 days, from the CIRP timeline. The decision aligned with Section 12(2) of the IBC, 2016 and Regulation 40C of the IBBI Regulations. The Applicant was directed to make efforts to complete the CIRP within the remaining timelines prescribed by the Code, ensuring justice in the circumstances of the case. Thus, the application for exclusion was granted, enabling the Resolution Professional to proceed with the Corporate Debtor's insolvency resolution process effectively.

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