2020 (1) TMI 1536 - Tri - Companies Law

Termination of Insolvency Process, Costs Imposed on Creditor

M/s. Surendra Steel Sales Versus M/s. Immortal Buildcon Pvt. Ltd.

The National Company Law Tribunal terminated the Corporate Insolvency Resolution process due to the Operational Creditor's settlement discussions and lack ... CIRP process - professional fees and reimbursement of expenses to be made to the IRP - HELD THAT:- This bench is apprised of the fact that the Operational Creditor has been in talks of settlement with the Corporate Debtor and, is therefore, not interested in taking any step to proceed with the CIR process. Under such circumstances with no other claimant and the sole member of the CoC not being interested in prosecuting the CIR process, it would be expedient to terminate the CIR process. The CIR process is hereby terminated. The Corporate Debtor is released from the rigors of the moratorium and is permitted to function through its own board - the Operational Creditor has not only failed to reimburse the expenses and fees of the Interim Resolution Professional, but has also wasted the time of this Bench after the petition was duly admitted. Be listed for a report on remittance of costs, on 14th January, 2020. Issues: Professional fees and expenses reimbursement to the IRP, termination of CIR process, imposition of cost on the Operational Creditor, referral of IRP's fees matter to IBBI.The judgment by the National Company Law Tribunal, New Delhi Bench, involved a dispute regarding the professional fees and reimbursement of expenses to be paid to the IRP. The Operational Creditor, being the sole member of the CoC, proposed a consolidated fee of &8377; 1 lakh inclusive of all expenses until the first CoC meeting, which was not fully paid despite the IRP's objections. The IRP claimed to have covered expenses from personal funds. The first CoC meeting took place, while the second meeting was postponed multiple times due to potential settlement talks with the Corporate Debtor, resulting in no progress in the case. As the Operational Creditor was in settlement discussions and uninterested in proceeding with the CIR process, and with no other claimants, the tribunal decided to terminate the CIR process, releasing the Corporate Debtor from moratorium to operate through its board. The Operational Creditor's failure to reimburse the IRP's expenses and fees led to the tribunal imposing a cost of &8377; 50,000 on the Operational Creditor, payable to the Prime Minister's Relief Fund, with a warning of contempt for non-payment.Regarding the IRP's fees and reimbursement, the tribunal deemed it appropriate to refer the matter to the IBBI to determine the IRP's remuneration based on the work done and claims made. The case was scheduled for a report on the remittance of costs on 14th January 2020, ensuring accountability and proper resolution of financial matters related to the insolvency proceedings.