2017 (9) TMI 1946 - Tri - Insolvency and Bankruptcy

Approval of Resolution Plan - Seeking extension of period of completion of insolvency resolution process in accordance with Rule 12 (2) of I B Code - HELD THAT - The learned counsel for the applicant however submitted that the applicant remained in custody throughout the period in one FIR registered against him and s still in custody but that cannot be a ground to consider for grant of extension of time as the order of admission and appointment of Interim Resolution Professional as proposed by the Corporate Debtor was passed in the presence of Corporate Debtor. The scope of extension of time can be only on an application made by the Interim Resolution Professional on the basis of the resolution of the Committee of Creditors as provided in sub-sections (2) and (3) of Section 12 of the Code. After expiry of 180 days or 270 days in case extension of 90 days is granted the only recourse is to initiate the liquidation process as provided in Chapter III of the Code. Application rejected.

Summary

Issues:
1. Approval of resolution plan and liquidation recommendation by Committee of Creditors.
2. Request for extension of time for resolution plan submission.
3. Dismissal of application for extension of time and initiation of liquidation process.
4. Appointment of Resolution Professional as Liquidator and related responsibilities.
5. Reimbursement of liquidation costs and fee payment to Liquidator.
6. Filing of reports and enforcement of personal guarantees by Financial Creditors.

Analysis:
1. The Tribunal admitted the petition under Section 10 of the Insolvency and Bankruptcy Code, 2016, declaring moratorium and appointing an Interim Resolution Professional. After multiple meetings, the Committee of Creditors rejected a resolution plan and recommended liquidation with 78.49% voting share. The plan was deemed repetitive and not in compliance with legal guidelines, leading to the decision for liquidation.

2. A request for an extension of time to submit a resolution plan was made by the applicant's representative, citing the need for more time to develop a viable plan. However, the Tribunal highlighted the requirement for timely submission of plans under the Code, emphasizing that extensions can only be granted based on specific criteria and through due process as outlined in the legislation.

3. The Tribunal dismissed the application for an extension of time, citing the expiration of the 180-day period for the resolution process without a compliant plan submission. As per Section 33 of the Code, the Tribunal ordered the liquidation of the Corporate Debtor, necessitating public announcements and Registrar of Companies notification.

4. The Resolution Professional was appointed as the Liquidator, with responsibilities outlined for initiating the liquidation process. The Liquidator was directed to publish announcements, manage claims, and adhere to regulatory requirements. The Liquidator's fees and expenses were to be reimbursed by the creditors, with specific provisions for fee payment and reporting obligations.

5. The Tribunal clarified the reimbursement of liquidation costs and emphasized the importance of timely fee payment to the Liquidator. The Liquidator was instructed to file reports as per regulations, with provisions for financial creditors to enforce personal guarantees and take necessary legal steps.

6. Lastly, the Tribunal addressed the payment of fees to the Resolution Professional, highlighting the priority of IRP and liquidation costs in asset distribution. The order was to be communicated to the Liquidator and Financial Creditor's counsel promptly to ensure compliance with the legal provisions governing insolvency proceedings.