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2023 (7) TMI 313 - AT - Insolvency and BankruptcyLiquidation of Corporate debtor - Rejection of application seeking extension of timeline as mentioned in the “Invitation for Submission of Scheme” - case of appellant is that Appellant has finalised a scheme of arrangement, but did not submit it since he had not been able to obtain an extension of the deadline - HELD THAT:- Admittedly, the order for liquidation of the corporate debtor was passed by the Adjudicating Authority on 7.10.2022. It is also noted that section 230 of the Companies Act, 2013 allows a scheme of compromise or arrangement to be proposed in respect of a corporate debtor under liquidation to achieve its revival as a going concern. Further Regulation 2-B of the Liquidation Process Regulations, 2016 stipulates a time period of ninety days for submission and final consideration of such a scheme of compromise or arrangement. The possibility of revival of a corporate debtor under liquidation has been considered as a valid mode of revival and during liquidation process, a scheme of compromise or arrangement in terms of section 230 of The Companies Act, 2013 is a distinct and clear possibility. It is also observed in para 68 of the Arun Kumar Jagatramka [2021 (3) TMI 611 - SUPREME COURT] judgment that an amendment was made on 25.7.2019 to the Liquidation Process Regulations, 2016 by the Insolvency and Bankruptcy Board of India to refer and include a process envisaged under section 230 of the Companies Act, 2013 as a valid method of revival of the corporate debtor during liquidation. As the various actions of the Appellant show, it is noted that by 4.1.2023, the Appellant had neither proposed a scheme of compromise and arrangement to the Liquidator or Stakeholders Consultation Committee or the secured creditors of the corporate debtor, and even after it was allowed to access the VDR on 19.1.2023 it did not show any concrete evidence for formulation such a scheme and its presentation to the Liquidator. The reasons given by the Appellant that it was waiting for a decision in IA No. 122/2023, which was filed for seeking extension of the deadline given in public notice dated 26.10.2022 to propose such a scheme are not convincing as merely filing of IA 122/2013 in no way stopped it from proposing a clear scheme of arrangement - there are no reason or logic as to why the Appellant did not approach the secured creditors to obtain their consent of the 75% threshold as required under section 230(2)(b) of The Companies Act if it was in possession of such a scheme. It is not clear as to why he did not propose a scheme to the Liquidator or the Stakeholders Consultation Committee. The Appellant has not shown any proof of a scheme of compromise and arrangement that is formulated and ready, and proposed for consideration nor has the Appellant obtained the consent of 75% of the secured creditors of the corporate debtor in support of such a scheme. Merely seeking an extension of the timeline without showing any evidence of sincere and serious efforts in preparation and formulation of such a scheme clearly shows that the request for extension of timeline is not supported by concrete action. In view of the fact that the 90 days’ timeline prescribed under the Regulation 2-B of the Liquidation Process Regulations, 2016 had expired on 4.1.2023 and no evidence about readiness of the scheme was shown, it is opined that the Adjudicating Authority has not committed any error in passing the Impugned Order. Appeal dismissed.
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