Termination of Insolvency Process, Costs Imposed on Creditor

The National Company Law Tribunal terminated the Corporate Insolvency Resolution process due to the Operational Creditor's settlement discussions and lack of interest in proceeding. The tribunal imposed a cost of 50,000 on the Operational Creditor for failing to reimburse the Insolvency Resolution Professional's expenses. The matter of the IRP's fees and reimbursement was referred to the Insolvency and Bankruptcy Board of India for determination based on work done. The tribunal scheduled a report on cost remittance for 14th January 2020 to ensure proper resolution of financial aspects in the insolvency proceedings.

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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.

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