Committee of Creditors to Cover IRP Expenses: Judgment Upheld

The judgment clarifies that the Committee of Creditors is liable to bear the expenses incurred by the Insolvency Resolution Professional as per Regulation 33 of the Insolvency and Bankruptcy Board of India Regulations. The Adjudicating Authority's orders directing the Committee of Creditors to cover the IRP expenses were upheld, and the appeals by the State Bank of India were disposed of with specified directions.

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Issues:
1. Liability of Committee of Creditors to bear expenses of Insolvency Resolution Professional.

Analysis:
The judgment involves appeals by the State Bank of India, a Financial Creditor and member of the Committee of Creditors, against orders passed by the Adjudicating Authority. The appeals concern the direction for the Committee of Creditors to bear expenses related to the Insolvency Resolution Professional (IRP). The key issue is whether the Committee of Creditors is obligated to cover the expenses incurred by the IRP.

Regulation 33 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 addresses the "cost of the interim resolution professional." It stipulates that the applicant, who files the insolvency application, is responsible for fixing the expenses for the IRP. If the applicant does not determine the expenses, the Adjudicating Authority will do so. The expenses borne by the applicant are to be reimbursed by the Committee of Creditors upon ratification. These ratified expenses are considered insolvency resolution process costs.

In this case, the respondents filed applications under Section 7 or 9 of the Insolvency and Bankruptcy Code, 2016, suggesting the names of the IRPs. As per Regulation 33, the applicant is initially liable for the IRP expenses, which are later reimbursed by the Committee of Creditors upon ratification. The orders passed by the Adjudicating Authority directing the Committee of Creditors to bear the IRP expenses were upheld based on the regulatory framework.

Therefore, the judgment clarifies that the Committee of Creditors is indeed liable to bear the expenses incurred by the Insolvency Resolution Professional, as per the provisions of Regulation 33. The impugned orders were modified accordingly, and the appeals were disposed of with the specified observations and directions.

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