Pre-CoC insolvency settlement can justify withdrawal of admission, while interim resolution professional fees remain payable.
Where a corporate insolvency resolution process is settled before constitution of the Committee of Creditors, the appellate tribunal may invoke its inherent powers to set aside the admission order and treat the insolvency application as withdrawn, particularly when the operational creditor has received the agreed payments and the corporate debtor remains a going concern. The text also notes that the Interim Resolution Professional's fee and incidental expenses may still be assessed for the period of actual function, with reasonable amounts allowed after adjusting sums already paid.
Issues: (i) Whether the admission order initiating corporate insolvency resolution process should be set aside in view of the settlement reached between the parties and the insolvency application treated as withdrawn; (ii) whether the fee and incidental expenses of the Interim Resolution Professional should be assessed and directed to be paid.
Issue (i): Whether the admission order initiating corporate insolvency resolution process should be set aside in view of the settlement reached between the parties and the insolvency application treated as withdrawn.
Analysis: The parties placed the settlement on record and the operational creditor accepted receipt of the agreed payments. The Committee of Creditors had not been constituted. In these circumstances, the Tribunal exercised its inherent power under Rule 11 and interfered with the admission order, noting that the settlement resolved the insolvency dispute and that the corporate debtor was a going concern.
Conclusion: The impugned admission order was set aside and the Section 9 application was disposed of as withdrawn.
Issue (ii): Whether the fee and incidental expenses of the Interim Resolution Professional should be assessed and directed to be paid.
Analysis: The Interim Resolution Professional had functioned for about five and a half months and claimed monthly fee along with publication expense and legal . The Tribunal assessed the fee at the claimed monthly rate, allowed the stated expenses, and directed payment after adjusting the amount already received.
Conclusion: The fee and expenses of the Interim Resolution Professional were allowed and the balance amount was directed to be paid.
Final Conclusion: The appeal succeeded on settlement, the insolvency admission was vacated, the proceedings were closed, and the corporate debtor was released from the insolvency process with consequential directions for payment of the Interim Resolution Professional.
Ratio Decidendi: Where the insolvency application is settled before constitution of the Committee of Creditors, the appellate tribunal may exercise its inherent powers to set aside the admission order and treat the proceeding as withdrawn, while still determining reasonable fees and expenses incurred in the interim process.
TaxTMI 
AI Drafter ✕
TaxTMI 
TaxTMI 
