Tribunal denies 90-day CIRP extension due to lack of Resolution Applicant & CoC support.

The Tribunal dismissed the application seeking a 90-day extension of the Corporate Insolvency Resolution Process (CIRP) due to the suspended directors' failure to attract a potential Resolution Applicant and the lack of support from the Committee of Creditors (CoC). The Tribunal emphasized adherence to the timelines prescribed under the Insolvency and Bankruptcy Code, 2016, and concluded that the extension request did not merit consideration. The application was dismissed, and the specific timelines for resolving the debt-ridden Corporate Debtor were upheld.

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Issues Involved:
1. Extension of Corporate Insolvency Resolution Process (CIRP) period.
2. Authority of suspended Board of Directors to seek extensions.
3. Impact of COVID-19 pandemic on CIRP timelines.
4. Compliance with Section 12 of the Insolvency and Bankruptcy Code (IBC), 2016.
5. Committee of Creditors' (CoC) decision-making process regarding extension requests.
6. Evaluation of potential Resolution Applicant's delay in submitting Expression of Interest (EoI).

Issue-wise Detailed Analysis:

1. Extension of Corporate Insolvency Resolution Process (CIRP) period:
The applicants, who are suspended directors of the Corporate Debtor, filed an application seeking a 90-day extension of the CIRP to attract a potential Resolution Applicant. The Tribunal initially indicated that an extension might be considered if a genuine Resolution Plan was presented. However, due to the COVID-19 pandemic and subsequent lockdown, no prospective Resolution Applicant came forward.

2. Authority of suspended Board of Directors to seek extensions:
The Resolution Professional argued that under the provisions of the IBC, 2016, the suspended Board of Directors is not empowered to seek an extension of the CIRP period. The Committee of Creditors (CoC) had already decided against granting an extension for receiving a Resolution Plan from a prospective applicant.

3. Impact of COVID-19 pandemic on CIRP timelines:
The applicants cited the COVID-19 pandemic as a reason for the delay in receiving a Resolution Plan. However, the Tribunal noted that the timelines for the prospective Resolution Applicant expired before the lockdown was declared. The Resolution Professional had followed up with a potential applicant, Mr. N.V. George, who failed to submit the necessary credentials or EoI within the stipulated time.

4. Compliance with Section 12 of the Insolvency and Bankruptcy Code (IBC), 2016:
Section 12 of the IBC, 2016, prescribes a 180-day time limit for completing the CIRP, extendable by 90 days if approved by 75% of the CoC's voting shares. The Tribunal referenced the order in Quantum Limited Vs. Indus Finance Corporation Limited, which emphasized that an extension should be granted only if a resolution is passed by the CoC within the initial 180 days.

5. Committee of Creditors' (CoC) decision-making process regarding extension requests:
The CoC, in its meetings, discussed and ultimately rejected the extension of time for submitting the EoI. The major financial creditor, holding a 64.75% voting share, opposed further extensions. Only Standard Chartered Bank, with a 17.80% voting share, suggested a 15-day extension, which was insufficient to meet the required 75% threshold.

6. Evaluation of potential Resolution Applicant's delay in submitting Expression of Interest (EoI):
The Tribunal found that the potential Resolution Applicant, Mr. N.V. George, did not submit the EoI within the deadline and failed to provide sufficient reasons for the delay. The argument that the pandemic caused the delay was not accepted, as the deadline expired before the lockdown. The Tribunal emphasized that the Resolution Applicant must demonstrate vigilance and sufficient cause for any delay.

Conclusion:
The Tribunal concluded that the applicants' request for a 90-day extension did not merit consideration. The potential Resolution Applicant's failure to submit the EoI on time and the lack of support from the CoC were decisive factors. The application filed by the suspended directors was dismissed, and the Tribunal upheld the adherence to the specific timelines prescribed under the IBC, 2016, for resolving the debt-ridden Corporate Debtor.

Order:
I.A. No. 218/KOB/2020 in M.A. No.22/KOB/2020 is dismissed.

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