2021 (12) TMI 185 - Tri - Insolvency and Bankruptcy

Extension Granted for Creditors to Review Plans, Prioritizing Company Resolution over Liquidation

The Tribunal granted a 50-day extension beyond the 330-day limit for the Committee of Creditors (CoC) to consider Resolution Plans, emphasizing the ... Seeking exclusion of 105 days from the CIRP period of the Corporate Debtor - seeking direction to the CoC of the Corporate Debtor to consider the Resolution Plan on PRA in time-bound manner - HELD THAT:- It is the prime intent of IBC and also held by the Hon'ble Apex Court that resolution and not liquidation should always be considered with all possibilities. The grant of time to Resolution Professional and CoC for moving towards achieving Resolution of the Corporate Debtor will be in the interest of all Home Buyers, who are also interested in considering the Plans. The only lacunae in the process of considering of Plan by CoC beyond prescribed period of CIRP. If the same is considered by this Bench for exclusion or extension there is possibility of Resolution forthcoming. The Hon'ble Supreme Court has also held that the wisdom of CoC be not interfered, unless same is in violation of law. The Resolution with respect to exclusion/extension was passed by CoC beyond threshold limit of 330 days as laid down in the Code. Hence, the Plans should not have been considered. If exclusion or extension is not considered the only option will be to send the Corporate Debtor in liquidation. This application is allowed by extending the CIRP period for further 50 days from today with the direction to allow the CoC to consider the Resolution Plans already placed before CoC or any other plans, if received within ten days of this order and complete the entire process strictly within the time granted. Issues involved:Application for exclusion of 105 days from the CIRP period, delay in considering Resolution Plan by CoC, power of Resolution Professional and CoC post CIRP period expiry, legality of Resolution Plans consideration post 330 days, safeguarding Home Buyers' rights.Analysis:1. Exclusion of CIRP period: The Resolution Professional sought exclusion of 105 days from the CIRP period to enable CoC to vote on Resolution Plans received after the CIRP period expired. The application included exclusion of 40 days due to Covid-19 lockdown and an additional 65 days due to a pending application. The Tribunal considered the previous rejection of the exclusion and the need to balance the interests of all stakeholders, especially Home Buyers.2. Role of Resolution Professional and CoC post CIRP period: Concerns were raised about the actions of the Resolution Professional and CoC after the expiry of the 330-day CIRP period. The erstwhile promoters argued that these entities acted beyond their authority post-CIRP period, emphasizing the need to stay the voting process on Resolution Plans. The Tribunal acknowledged the need to adhere to the legal framework while considering extensions or exclusions.3. Consideration of Resolution Plans post 330 days: The Tribunal highlighted that the Resolution Plans were considered by CoC after the 330-day threshold set by the Insolvency and Bankruptcy Code (IBC). The Tribunal deliberated on the consequences of not considering an extension or exclusion, which could lead to liquidation of the Corporate Debtor. The Tribunal emphasized the importance of resolving the company rather than opting for liquidation.4. Safeguarding Home Buyers' rights: The Tribunal recognized the interests of Home Buyers who invested their money in the Corporate Debtor and could be adversely affected by liquidation. In line with the intent of the IBC to prioritize resolution over liquidation, the Tribunal granted a 50-day extension beyond the 330-day limit for the CoC to consider the Resolution Plans. The Tribunal warned the Resolution Professional and CoC about the need to comply with legal provisions and complete the process within the extended timeline.5. Final Decision: The Tribunal allowed the application by extending the CIRP period for a further 50 days to facilitate the CoC's consideration of the Resolution Plans. The decision aimed to safeguard the rights of Home Buyers and ensure a fair process for all stakeholders involved in the resolution proceedings.