2021 (2) TMI 1198 - Tri - Insolvency and Bankruptcy

Suspended management of MSME allowed to submit Resolution Plan by 01.03.2021. Committee of Creditors to review and decide.

Piyush Periwal Versus Stressed Assets Stabilization Fund (SASF) and Ors.

The Tribunal allowed the suspended management, an MSME, to submit a feasible Resolution Plan by 01.03.2021. The Resolution Professional will present the ... Validity and completeness of Information Memorandum circulated by the Respondent No. 2 - permission to petitioner to file a composite Resolution Plan - permission to Petitioner to file Resolution Plan as the first right after the outcome of the decision passed by the NCLAT - HELD THAT:- The claim has been filed by the FC for ₹ 133,54,94,330.00 against the Corporate Debtor for the loan disbursed amount of ₹ 3,07,71,127.00 by the IDBI to the Principal Borrower M/s. NBL - It is not clear how the FC has claimed 43 times of the amount of loan disbursed 21 years back when the FC is under RBI Regulations and capping of interest rate, implementation of Base Rate (2010)/MCLR is in operation for last several years in the Country especially for MSME Unit. Covid Pandemic started from 24.03.2020 and shutdown/lockdown were in full swing from 25.03.2020 with several Covid protocol guidelines issued by the Govt. of India, State Govt. District Magistrates etc. for adhering into day to day life/functioning of Industries Office - COC has approved a Resolution Plan on 10.11.2020 and the said plan is placed now before this Adjudicating Authority by the RP for consideration. Thus, the Suspended Management of the CD be given a chance to submit Resolution Plan as prayed for - application disposed off. Issues Involved:1. Defective and incomplete Information Memorandum.2. Right to file a composite Resolution Plan.3. First right to file Resolution Plan post NCLAT decision.4. Interim relief to halt COC meetings and Resolution Plan finalization.5. Continuation of CIRP without final admission order.6. Allegations of misconduct by Resolution Professional.7. Excessive financial claim by Financial Creditor.8. MSME status and special considerations under IBC.Issue-Wise Detailed Analysis:1. Defective and Incomplete Information Memorandum:The petitioner, a suspended management promoter, argued that the Information Memorandum (IM) circulated by the Resolution Professional (RP) was defective and incomplete. The petitioner highlighted errors in the IM and requested necessary changes to be made.2. Right to File a Composite Resolution Plan:The petitioner sought permission to file a composite Resolution Plan once a revised IM was provided by the RP, factoring in all important issues not previously considered.3. First Right to File Resolution Plan Post NCLAT Decision:The petitioner claimed the right to file a Resolution Plan first, following the outcome of the decision by the National Company Law Appellate Tribunal (NCLAT). The petitioner emphasized their status as a promoter of an MSME, which entitles them to certain exemptions under Section 29A of the IBC.4. Interim Relief to Halt COC Meetings and Resolution Plan Finalization:The petitioner requested interim relief to direct the respondents not to conduct any Committee of Creditors (COC) meetings or finalize the Resolution Plan until the matter was disposed of by the NCLAT.5. Continuation of CIRP without Final Admission Order:The petitioner argued that the Corporate Insolvency Resolution Process (CIRP) continued without a final admission order, following the Supreme Court's setting aside of the NCLAT's order. The petitioner contended that the process under IBC is irreversible and has led to significant financial losses for the Corporate Debtor.6. Allegations of Misconduct by Resolution Professional:The petitioner accused the RP of failing to keep the Corporate Debtor as a going concern and acting in violation of the code of conduct and ethics under the IBC. The petitioner alleged that the RP did not take advice from the suspended board and failed to perform essential services.7. Excessive Financial Claim by Financial Creditor:The petitioner questioned the financial claim made by the Financial Creditor (FC), which was significantly higher than the original loan amount. The petitioner highlighted discrepancies in the claimed amount and suggested that it might attract Section 75 of the IBC, 2016.8. MSME Status and Special Considerations under IBC:The petitioner emphasized the MSME status of the Corporate Debtor and referred to Section 240-A of the IBC, which provides certain exemptions to MSMEs. The petitioner argued that the MSME status should be considered while allowing them to submit a Resolution Plan.Judgment:The Tribunal considered arguments from both sides and reviewed the documents and orders from various authorities, including the Supreme Court and NCLAT. The Tribunal noted the following key points:- The issue of limitation was clarified by the Supreme Court and NCLAT.- The CIRP proceedings and approval of the current Resolution Plan occurred during the COVID-19 pandemic.- The Corporate Debtor is an MSME and a Corporate Guarantor to the Principal Borrower.- The original loan amount was Rs. 3.07 crores, and the excessive claim by the FC was noted.Order:1. The Suspended Management of the Corporate Debtor, being an MSME, is given a chance to submit a concrete, feasible, and viable Resolution Plan by 01.03.2021.2. The RP will place the Resolution Plan before the COC for examination.3. Information made available to the current Resolution Applicant will also be provided to the Suspended Management.4. The COC is at liberty to negotiate with the existing Resolution Applicant and the Suspended Management to select the most commercially viable and technically feasible plan.5. The COC must decide by 05.03.2021, and the RP must submit the report/plan by 08.03.2021.The IA is disposed of with the above observations and directions.