Extension granted for Corporate Insolvency Resolution Process (CIRP) to promote timely resolution and asset value The court granted an extension of 90 days for the Corporate Insolvency Resolution Process (CIRP) for a corporate debtor, starting from 02.10.2018. The ...
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Extension granted for Corporate Insolvency Resolution Process (CIRP) to promote timely resolution and asset value
The court granted an extension of 90 days for the Corporate Insolvency Resolution Process (CIRP) for a corporate debtor, starting from 02.10.2018. The extension was approved by the Committee of Creditors (CoC) due to reasons such as the need for potential resolution applicants to conduct meaningful diligence and the impact of a recent transporters' strike on the supply of key raw materials. The judgment emphasized the importance of timely resolution for maximizing asset value and promoting entrepreneurship. It criticized the practice of inviting expressions of interest before accepting resolution plans and declared certain regulations as ultra vires, directing the Insolvency and Bankruptcy Board of India (IBBI) to frame regulations in compliance.
Issues: 1. Extension of time period for Corporate Insolvency Resolution Process.
Analysis: The judgment pertains to an application filed under Section 12(2) seeking an extension of the time period for the Corporate Insolvency Resolution Process (CIRP) for a corporate debtor by an additional 90 days starting from 02.10.2018. The application was supported by a resolution passed by the Committee of Creditors (CoC) in its 4th meeting on 07.08.2018, where the reasons for extension were discussed. The Resolution Professional (RP) informed the CoC about the need for an extension due to various reasons such as the need for more time for potential resolution applicants to conduct meaningful diligence and the impact of a recent transporters' strike on the supply of key raw materials. The CoC approved the extension of the last date for submission of resolution plans from 10 August, 2018, to 31st August, 2018, with a significant majority vote of 96.99%.
In addition to the extension of the time period, the CoC also passed a resolution authorizing the RP to file an application under Section 12 of the Insolvency & Bankruptcy Code, 2016 with the National Company Law Tribunal (NCLT) for an extension of the CIRP not exceeding 90 days. The judgment highlighted the importance of timely resolution of insolvency cases for maximizing the value of assets and promoting entrepreneurship, as outlined in the objectives of the Insolvency and Bankruptcy Code. It also referenced previous legal judgments emphasizing the need for a time-bound and consolidated resolution process without unnecessary complications like inviting expressions of interest before submission of resolution plans.
Furthermore, the judgment criticized the practice of inviting expressions of interest before accepting resolution plans, stating that it hinders the speed and efficiency of the CIR process. It declared Regulation 36A, which allowed for the invitation of expressions of interest, as ultra vires of Section 240(1) of the Insolvency & Bankruptcy Code. The judgment directed the Insolvency and Bankruptcy Board of India (IBBI) to frame regulations in line with its competence and the provisions of the Code. Ultimately, the application for extension was granted, extending the CIRP period by 90 days until 31.12.2019. The judgment concluded by instructing the IBBI to comply with the order and report accordingly.
Full Summary is available for active users!
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
of 
TaxTMI 
