NCLAT Revives CIRP Against Corporate Debtor for Breach of Settlement Terms

The Hon'ble NCLAT ordered the revival of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor due to the breach of settlement terms and default on post-dated cheques. The Adjudicating Authority directed the Interim Resolution Professional to resume duties, effectively restoring the CIRP process. The Financial Creditor was granted relief, and instructions were given to communicate the order to relevant parties and update the Corporate Debtor's status. The official revival of the CIRP against the Corporate Debtor was pronounced via video conferencing.

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Issues:
Revival/restoration/re-initiation of Corporate Insolvency Resolution Process (CIRP) under Insolvency & Bankruptcy Code, 2016 (IBC, 2016) based on breach of settlement terms and default on post-dated cheques.

Analysis:
The Applicants/Financial Creditor filed an application for revival of CIRP against the Corporate Debtor, as per the settlement deed dated 02.12.2019, following an earlier admission and subsequent setting aside of the CIRP initiation. The Corporate Debtor failed to honor the settlement terms, leading to the revival application. The Hon'ble Appellate Authority provided multiple opportunities to the Corporate Debtor to comply with the settlement terms, setting a payment schedule. However, no further payments were made by the Corporate Debtor, prompting the revival request by the Financial Creditor.

The Hon'ble NCLAT's order dated 06.12.2019 emphasized that breach of settlement terms or default on post-dated cheques could lead to the revival of the CIRP. The Adjudicating Authority, considering the breach of settlement terms and the subsequent failure to adhere to the payment schedule, decided to revive the CIRP against the Corporate Debtor. The Interim Resolution Professional was directed to resume duties as per the original order dated 03.09.2019, effectively restoring the CIRP process against the Corporate Debtor.

The Adjudicating Authority officially revived and restored the admission order against the Corporate Debtor dated 03.09.2019, granting relief to the Financial Creditor. The Financial Creditor was instructed to communicate this order to the Resolution Professional and the Corporate Debtor promptly. Additionally, the Registry was directed to inform the Registrar of Companies for updating the Corporate Debtor's status on the MCA-21 site. The order was pronounced through video conferencing, ensuring the official revival of the CIRP against the Corporate Debtor.

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