CIRP withdrawal under Section 12A failed where settlement conflicted with timeline-based insolvency process requirements.

Withdrawal of CIRP under Section 12A of the Insolvency and Bankruptcy Code was refused despite CoC approval of a settlement, because the proposal had to comply with the Code's time-bound framework. Repeated postponements in issuing the invitation for expression of interest and publishing Form G were found to lack proper approval, and the settlement structure was treated as inconsistent with the prescribed CIRP timelines. The arrangement was also regarded as uncertain and dependent on future contingencies. The withdrawal request was therefore rejected and the application dismissed.

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Issues: Whether the application for withdrawal of the corporate insolvency resolution process under Section 12A of the Insolvency and Bankruptcy Code, 2016 deserved to be allowed.

Analysis: The settlement between the promoters and the lenders had been placed before the Committee of Creditors and was approved by the requisite voting share. However, the withdrawal request was examined against the statutory framework governing CIRP, including the prescribed timelines for publication of Form G and completion of the process. The repeated postponements of the invitation of expression of interest and publication of Form G were found to be without proper approval, and the proposed settlement structure was considered inconsistent with the time-bound scheme of the Code and Regulations. The arrangement was also viewed as uncertain and dependent on future contingencies.

Conclusion: The request for withdrawal under Section 12A was rejected and the application was dismissed.

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