Exclusion of 147 days from CIRP due to non-cooperation by suspended directors

The Tribunal allowed the exclusion of 147 days from the Corporate Insolvency Resolution Process (CIRP) period of 180 days due to non-cooperation by suspended directors and management of the corporate debtor. This exclusion aimed to facilitate the Resolution Professional in completing the CIRP effectively. The Resolution Professional was directed to expedite the process and submit quarterly status reports. The interlocutory application was granted without costs, with the order served to relevant parties for further action.

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Issues:
Exclusion of time from CIRP period due to non-cooperation by suspended directors and management.

Analysis:
The interlocutory application was filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking the exclusion of 147 days from the CIRP period of 180 days due to non-cooperation by the suspended directors and management of the corporate debtor. The Resolution Professional faced challenges in obtaining necessary information and documents to carry out his duties effectively. Despite efforts to contact the suspended directors and former employees, no cooperation was received, hindering the preparation of the information memorandum and running the CIRP process.

The Tribunal noted that the Applicant could not function properly due to the non-cooperation of the Promoters of the Corporate Debtor. Essential records were not provided, management was not handed over, and the whereabouts of the corporate debtor remained unknown, indicating a lack of cooperation and compliance. However, after receiving documents from the statutory auditor, the Applicant was able to progress in running the CIRP process, including preparing the information memorandum and inviting expressions of interest.

Considering the circumstances and to ensure justice, the Tribunal allowed the exclusion of 147 days from the CIRP period of 180 days. This exclusion was granted from the date of the visit to the registered office by the Resolution Professional to the date when the statutory auditor provided some financial information. This decision aimed to facilitate the Resolution Professional and Committee of Creditors in completing the Corporate Insolvency Resolution Process effectively. The Resolution Professional was directed to expedite the CIRP process and submit quarterly status reports on the progress made.

Ultimately, the interlocutory application was allowed without any orders on costs. The Tribunal ordered the service of the order copy to the relevant parties and consigned the file to records for further action.

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