Suspended directors ordered to cooperate in insolvency resolution process, failure to comply not tolerated.

The Tribunal partly allowed the application under Sections 19(2) and 60(5) of the Insolvency and Bankruptcy Code, 2016, directing the Suspended Directors to cooperate with the Resolution Professional for the Corporate Insolvency Resolution Process. Despite pending proceedings, non-cooperation from the Respondents was deemed insufficient to impede the time-bound CIRP. The decision emphasized the obligation of all personnel associated with the Corporate Debtor to provide necessary information and documents for the smooth progress of the CIRP until completion.

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Issues:
Application under Section 19(2) and 60(5) of Insolvency and Bankruptcy Code, 2016 seeking cooperation from Suspended Directors for Corporate Insolvency Resolution Process (CIRP).

Analysis:
1. Background and Application Details:
The Resolution Professional filed an application against the Suspended Directors of the Corporate Debtor seeking cooperation for the CIRP under Sections 19(2) and 60(5) of the Insolvency and Bankruptcy Code, 2016. The Applicant took over as Interim Resolution Professional and initiated the CIRP process, requesting necessary information from the Respondents.

2. Non-Cooperation Allegations:
The Respondents failed to provide essential information despite requests, hindering the CIRP progress. The valuers couldn't complete the Information Memorandum due to the absence of signed provisional financials. The lack of cooperation from the Suspended Board of Directors was impeding the CIRP process.

3. Respondents' Counter and Arguments:
The Respondents contended that they were the new management and were in transition when the CIRP was initiated. They filed a Recall Petition for the ex-parte order dated 25.11.2021, seeking dismissal of the Application based on pending proceedings.

4. Judgment and Legal Mandates:
The Tribunal noted the time-bound nature of the CIRP and emphasized the obligation of all personnel associated with the Corporate Debtor to cooperate with the Resolution Professional as per Sections 19(1) and 19(3) of the IBC, 2016. Despite the pending Recall Petition, non-cooperation from the Respondents could not impede the CIRP process.

5. Decision and Direction:
The Tribunal found the reasons provided by the Respondents insufficient to dismiss the application. Consequently, the Application was partly allowed, directing all Respondents to cooperate with the Resolution Professional, provide necessary information, documents, and clarifications for the smooth progress of the CIRP until its completion, including sharing books of accounts.

This detailed analysis highlights the legal proceedings, arguments, and the Tribunal's decision regarding the cooperation required from the Suspended Directors for the successful conduct of the Corporate Insolvency Resolution Process.

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