Tribunal Orders Cooperation from Directors & Auditor in Insolvency Case

The Tribunal granted the applications under Section 19(2) of the Insolvency and Bankruptcy Code, directing the Directors and Statutory Auditor of the corporate debtor, as well as the Directors of the suspended board, to cooperate with the Interim Resolution Professional and Liquidator respectively. Failure to comply within three weeks would result in police intervention. The Tribunal stressed the obligation of the suspended management to provide necessary information and assistance, allowing the IRP and Liquidator to seek further action from the Adjudicating Authority if needed.

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Issues:
1. Application under Section 19(2) of the Insolvency and Bankruptcy Code, 2016 seeking directions for cooperation from Directors and Statutory Auditor of the corporate debtor.
2. Application under Section 19(2) of the Insolvency and Bankruptcy Code, 2016 seeking directions for cooperation from Directors of suspended board of corporate debtor for Liquidator.

Issue 1: Application under Section 19(2) - Cooperation from Directors and Statutory Auditor

The Tribunal dealt with an application filed by the Interim Resolution Professional (IRP) seeking directions for Directors and Statutory Auditor of the corporate debtor to provide necessary information and assistance. The IRP had made several attempts to contact the concerned parties but received no response. Despite issuing notices, the respondents did not appear. The Tribunal noted the obligation of the suspended management to cooperate with the IRP as per the Insolvency and Bankruptcy Code. Consequently, the Tribunal directed the respondents to provide the required assistance within three weeks, warning of police intervention in case of non-compliance. The IRP was granted the liberty to approach the Adjudicating Authority in case of further non-compliance, leading to the allowance and disposal of the application.

Issue 2: Application under Section 19(2) - Cooperation from Directors of Suspended Board for Liquidator

In a separate application, the Liquidator sought directions against the Directors of the suspended board of the corporate debtor for cooperation. The Liquidator highlighted the pending information required from the respondents for the smooth functioning of the Corporate Insolvency Resolution Process (CIRP). Despite issuing notices and reminders, the respondents failed to respond or provide the necessary details. The Tribunal observed the lack of interest from the respondents in defending the matter. Similar to the previous issue, the Tribunal emphasized the obligation of the suspended management to extend cooperation to the Liquidator. Consequently, the Tribunal directed the Directors to provide the required information and assistance within three weeks, allowing the Liquidator to seek police assistance in case of non-compliance. Additionally, the Liquidator was instructed to retrieve necessary information from the corporate debtor's systems and utilize digital forensic companies if needed. The non-compliance would empower the Liquidator to approach the Adjudicating Authority for appropriate action, leading to the allowance and disposal of the application.

This detailed analysis of the judgment showcases the Tribunal's approach in addressing the applications under Section 19(2) of the Insolvency and Bankruptcy Code, emphasizing the importance of cooperation from the concerned parties for the effective resolution and liquidation processes.

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