Tribunal dismisses application under Insolvency Code due to approved One Time Settlement

The Tribunal dismissed the application under Section 19(2) of the Insolvency and Bankruptcy Code, 2016, as the One Time Settlement (OTS) proposed by the Respondent was approved by the Financial Creditor. The approval of the OTS indicated a potential resolution of outstanding liabilities within the specified timeframe, allowing the Interim Resolution Professional to take necessary steps if the OTS failed or was not honored by the Respondent.

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Issues:
1. Application under Section 19(2) of the Insolvency and Bankruptcy Code, 2016 seeking relief related to Corporate Insolvency Resolution Process (CIRP).
2. Non-cooperation of Suspended Directors in providing information and assets of the Corporate Debtor.
3. Dispute regarding cash credit facility and personal guarantee executed by Respondent No. 1.
4. Review petition filed by Respondent against ex-parte order and subsequent One Time Settlement (OTS) proposal.
5. Approval of OTS by Financial Creditor and implications on the ongoing legal proceedings.
6. Decision on the application in light of the OTS approval and timeline for settlement.

Analysis:
1. The Tribunal received an application under Section 19(2) of the Insolvency and Bankruptcy Code, 2016, requesting the Respondents to provide necessary information and cooperate in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor. The Interim Resolution Professional (IRP) sought assistance in identifying company assets and completing the CIR process. However, the Respondents failed to comply with the requests, leading to the application before the Tribunal.

2. The Respondents, particularly the Suspended Directors, were accused of non-cooperation in handing over essential details and assets of the Corporate Debtor. Despite requests from the IRP, the Respondents did not facilitate the process, causing hindrance to the resolution proceedings.

3. A dispute arose concerning a cash credit facility availed by Respondent No. 1 from a Financial Creditor, including the execution of a loan agreement, mortgage of assets, and personal guarantee. Respondent No. 1 cited health issues as a reason for inability to manage the company affairs effectively.

4. Respondent's legal history involved a review petition against an ex-parte order and subsequent submission of a One Time Settlement (OTS) proposal. The Respondent sought to settle the liabilities with the Financial Creditor through the OTS, which was approved after legal proceedings and High Court intervention.

5. The approval of the OTS by the Financial Creditor had significant implications on the ongoing legal proceedings and the resolution process. The terms of the OTS included a structured repayment plan and conditions for withdrawal of claims and legal actions, impacting the resolution timeline and creditor agreements.

6. Considering the approval of the OTS and the timeline provided for settlement, the Tribunal dismissed the application, allowing the IRP to take necessary steps if the OTS failed or was not honored by the Respondent. The decision was based on the understanding that the Financial Creditor's approval of the OTS indicated a potential resolution of the outstanding liabilities within the specified timeframe.

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