2021 (1) TMI 713 - Tri - Insolvency and Bankruptcy

Tribunal Extends CIR Process by 60 Days, Deducts Lockdown Period

The Tribunal extended the Corporate Insolvency Resolution (CIR) process period by 60 days beyond the initial 270 days, deducting the lockdown period from ... Extension of corporate insolvency resolution process - exclusion of lockdown period from CIRP timelines - second proviso to Section 12(3) regarding extension by Committee of Creditors - Regulation 40C of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - Regulation 47A of the IBBI (Liquidation Process) Regulations, 2016 - Supreme Court order extending limitation from 15 March 2020 - NCLAT suo motu order excluding lockdown period for counting CIRP timeExtension of corporate insolvency resolution process - second proviso to Section 12(3) regarding extension by Committee of Creditors - exclusion of lockdown period from CIRP timelines - Regulation 40C of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - NCLAT suo motu order excluding lockdown period for counting CIRP time - Supreme Court order extending limitation from 15 March 2020 - Application for extension of the CIRP period by 60 days beyond 270 days and exclusion of the lockdown period from computation of CIRP timelines was allowed. - HELD THAT: - The Resolution Professional filed the application under Section 12(3) of the Code read with Regulation 40 and 40C seeking a 60 day extension beyond 270 days in view of receipt of resolution plans and a COC decision with 88.74% voting share taken on 30.03.2020. The Tribunal noted the Supreme Court's order extending limitation w.e.f. 15.03.2020 and the NCLAT suo moto order of 30.03.2020 directing exclusion of the lockdown period for counting CIRP time. The Tribunal also relied on IBBI's insertion of Regulation 40C (and the analogous Regulation 47A for liquidation) which provides that the period of lockdown shall not be counted for timelines where activities could not be completed due to lockdown. Applying these authoritative orders and regulations and having regard to the receipt of resolution plans and the COC's resolution, the Tribunal exercised its power to extend the CIRP period by 60 days beyond 270 days after deducting the lockdown period from 25.03.2020 to 31.07.2020. [Paras 6, 7]IA No. 278/2020 disposed of by extending the CIRP by 60 days beyond 270 days after excluding the period 25.03.2020 to 31.07.2020 from computation of the CIRP timeline.Final Conclusion: The Tribunal allowed the Resolution Professional's application and extended the corporate insolvency resolution process by 60 days beyond 270 days, excluding the specified lockdown period from the computation of timelines, and disposed of IA No. 278/2020. Issues:Extension of period for Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code due to COVID-19 lockdown.Issue 1: Extension of CIR Proceedings PeriodThe Resolution Professional of M/s. Kudos Chemie Ltd. filed an application seeking an extension of the Corporate Insolvency Resolution (CIR) process period beyond the initial 270 days under Section 12(3) of the Insolvency and Bankruptcy Code. The Committee of Creditors (COC) had passed a resolution with 88.74% voting share to extend the CIR process by 60 days due to the lockdown period affecting the processing of received resolution plans. The applicant sought directions for this extension, citing the lockdown's impact on the resolution process timeline.Issue 2: Legal Framework and OrdersThe judgment referred to various legal orders and regulations related to the extension of timelines due to the COVID-19 lockdown. The Supreme Court's order extended the period of limitation for all legal proceedings from 15th March 2020 until further notice. The National Company Law Appellate Tribunal also issued orders excluding the lockdown period for counting the CIR process timeline. Additionally, the Insolvency and Bankruptcy Board of India introduced Regulation 40C and Regulation 47A, excluding the lockdown period from the computation of timelines for the CIR process and liquidation process, respectively.Issue 3: Disposition of the ApplicationConsidering the legal framework, orders, and the circumstances of the case, the Tribunal disposed of the application by extending the CIR process period by 60 days beyond the initial 270 days, deducting the lockdown period from 25.03.2020 to 31.07.2020. The decision was made in line with the COC's resolution, the relevant legal provisions, and the impact of the lockdown on the resolution process timeline. The Tribunal directed the Registry to provide a copy of the order to the applicant's counsel.This judgment addressed the extension of the Corporate Insolvency Resolution process period due to the COVID-19 lockdown, considering the legal provisions, resolutions by the COC, and orders issued by higher judicial authorities and regulatory bodies. It highlighted the impact of the lockdown on the resolution process timeline and provided a comprehensive analysis of the legal framework governing such extensions.