2020 (3) TMI 160 - Tri - Insolvency and Bankruptcy

Tribunal allows withdrawal of CIRP, corporate debtor resumes operations

The Tribunal granted permission for the withdrawal of the Corporate Insolvency Resolution Process (CIRP) filed against the corporate debtor under Section ... Withdrawal of insolvency petition under Section 12A - application under Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2019 - interim resolution professional acting before constitution of the committee of creditors - requirement of Form FA and compliance with procedural safeguards for withdrawalWithdrawal of insolvency petition under Section 12A - application under Regulation 30A of IBBI (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2019 - interim resolution professional acting before constitution of the committee of creditors - requirement of Form FA and compliance with procedural safeguards for withdrawal - Application for withdrawal of the admitted Section 9 petition was permissible and was allowed after parties settled and procedural requirements under Regulation 30A were complied with. - HELD THAT: - The Tribunal found that the petition under Section 9 was admitted on 20.11.2019 and CIRP was initiated with moratorium and appointment of IRP. The parties reached an amicable settlement and the operational creditor received the settlement amount and executed and sent Form FA to the IRP. The IRP placed on record proof of payment, receipts, DDs, MoU and that publication had been effected and no claims had been received. As the committee of creditors was not constituted, the application for withdrawal was maintainable through the IRP under Regulation 30A(1)(a). The Tribunal recorded that the procedure prescribed by Regulation 30A, including submission of Form FA and particulars of expenses, had been followed. Relying on its power under Section 12A read with Regulation 30A, the Tribunal exercised discretion to permit withdrawal of the petition and to lift the moratorium, enabling the corporate debtor to resume control through its board. [Paras 10, 11]Application under Section 12A read with Regulation 30A allowed; CIRP and moratorium withdrawn and corporate debtor permitted to function through its Board of Directors with immediate effect.Final Conclusion: The Tribunal allowed the IRP's application to withdraw the admitted Section 9 petition pursuant to Section 12A and Regulation 30A, having found that the parties settled the claim, Form FA and supporting documents were filed, the committee was not constituted, and procedural requirements for withdrawal were complied with; the CIRP and moratorium were withdrawn and the corporate debtor restored to its board. Issues:Application under Section 12A of I&B Code seeking permission to withdraw Company Petition CP(IB)No.419/9/HDB/2019.Detailed Analysis:1. Admission of Petition under Section 9:- The Application sought permission to withdraw the Company Petition filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, after the Tribunal admitted the petition and initiated the Corporate Insolvency Resolution Process against the corporate debtor.- The parties settled the issue after a moratorium order was passed, with the operational creditor paying an amount towards full settlement.- No claims were received after paper publication, and the corporate debtor undertook to discharge any future claims without prejudice to its rights.2. Constitution of CoC and Approval:- The Interim Resolution Professional (IRP) stated that since the Committee of Creditors (CoC) was not constituted, approval with 90% voting share was not required as per Section 12A.- The IRP reported that both parties settled the matter amicably, and the operational creditor requested to withdraw the Corporate Insolvency Resolution Process (CIRP) proceedings.3. Compliance with Regulations:- The IRP followed the procedure prescribed under Regulation 30A of IBBI for withdrawal of the application.- The IRP provided details of expenses incurred, payments made, and copies of relevant documents such as receipts, demand drafts, and the Memorandum of Understanding (MoU).4. Authority to Permit Withdrawal:- The Adjudicating Authority had the power under Section 12A, read with Regulation 30A of IBBI, to allow withdrawal of the application even after the petition's admission.- By exercising the power under Section 12A of the I&B Code, the Tribunal granted permission for the withdrawal of the CIRP filed against the corporate debtor, thereby lifting the moratorium order and allowing the corporate debtor to resume independent operations through its Board of Directors.5. Decision and Conclusion:- The Tribunal allowed the Application under Section 12A of the I&B Code, acknowledging the settlement between the parties and permitting the withdrawal of the Company Petition.- Consequently, the CIRP against the corporate debtor was withdrawn, the moratorium order was lifted, and the corporate debtor was authorized to function independently through its Board of Directors with immediate effect.This detailed analysis encapsulates the key aspects of the judgment, outlining the legal grounds, procedural compliance, and the Tribunal's decision to permit the withdrawal of the Company Petition under Section 12A of the Insolvency and Bankruptcy Code, 2016.