2023 (5) TMI 529 - AT - Insolvency and Bankruptcy

Rejection of application for withdrawal of application (for closing the CIRP under 12A of IBC) - HELD THAT - Present is the case where CoC has already been constituted and the Resolution Plan were under consideration by the CoC. The application filed by the Appellant cannot be treated to be an application for settlement u/s 12A - Any proposal for re-structuring cannot be treated to be the proposal u/s 12A hence we do not find any error in rejecting the application filed by the Appellant. Moreover there is no consent by 90% of CoC in favour of 12A proposal of the Appellant. There are no error in the order of the Adjudicating Authority the appeal is dismissed.

Summary

Issues involved:
1. Challenge to order allowing liquidation process initiation u/s 33(2)
2. Rejection of application for closing CIRP under Section 12A

Issue 1 - Liquidation Process Initiation:
The Appellant challenged the order allowing the initiation of the liquidation process under Section 33(2) and the rejection of their application to close the CIRP under Section 12A. The Appellant's application u/s 12A sought various reliefs, including production of CoC meeting minutes, closing of CIRP by treating it as withdrawn under Section 12A, stay on further proceedings, and any other suitable order. The Adjudicating Authority noted that since the 12A application was not filed by the IRP, it could not be entertained. The Appellant's Counsel argued that the application was rejected on technical grounds without considering its merits. The Tribunal reviewed the submissions and records, emphasizing that Section 12A allows withdrawal of applications admitted u/s 7, 9, or 10 with 90% CoC approval. In this case, as the CoC was already constituted and considering Resolution Plans, the Appellant's restructuring proposal did not qualify as a Section 12A settlement application. The Tribunal found no error in the rejection as there was no 90% CoC consent for the Appellant's 12A proposal. Therefore, the appeal was dismissed, affirming the Adjudicating Authority's order.

Issue 2 - Application under Section 12A:
The Adjudicating Authority rejected the Appellant's application under Section 12A, which was based on a restructuring proposal submitted by the Appellant. The Tribunal clarified that the CoC had already considered and rejected a 12A proposal by another party in its 30th meeting. As per Section 12A of the IBC, withdrawal of applications admitted under Sections 7, 9, or 10 can be allowed by the Adjudicating Authority with 90% CoC approval. In this case, the Tribunal determined that the Appellant's restructuring proposal did not meet the criteria for a Section 12A application, as it was not supported by 90% CoC consent. The rejection of the Appellant's application was upheld, and the Tribunal found no error in the Adjudicating Authority's decision.