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IRP to reissue request for revised resolution plan from bidder with a view to revive corporate debtor: SC

November 7, 2019[2019] 111 taxmann.com 46 (SC)
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IBC : Supreme Court holds that in view of legislative changes which have expanded scope of resolution plan and with a view to revive corporate debtor, CIRP of corporate debtor was to be allowed to invite revised resolution plan from final bidders who had submitted resolution plan on earlier occasion and place revised plan(s) and complete CIRP within a period of 90 days from date of present order

Facts

• NCLAT by order (IDBI Bank Ltd. v. Anuj Jain [2019] 107 taxmann.com 469 (NCLAT- New Delhi) held that where in corporate insolvency resolution process of corporate debtor (Jaypee Infratech Ltd.) resolution professional sought exclusion of period from 17-9-2018 to 4-6-2019 during which matter remained pending for consideration before Adjudicating Authority relating to voting share of allottees for purpose of counting 270 days, period from 17-9-2018 i.e. date of application filed by Association of allottees for clarification and till final decision on 4-6-2019 i.e. date matter was finally decided by Third Member (Total 260 days) was be excluded for purpose of counting 270 days, however, as matter was pending since long, total period of 260 days was not excluded but 90 days were excluded for purpose of counting period of 270 days of corporate insolvency resolution process(CIRP).

• Appellant assailed above order questioning power/authority of NCLAT in law to exclude 90 days from statutory period of CIRP.

Held

• In view of recent legislative changes, scope of resolution plan stands expanded which may now include provision for restructuring corporate debtor including by way of merger, amalgamation and demerger and more so power bestowed on CoC to consider not only feasibility and viability of resolution plan but also manner of distribution proposed, which may take into account order of priority amongst creditors. Additionally, recently inserted section 12A enables adjudicating authority to allow withdrawal of an application filed under section 7 or section 9 or section 10, on an application made by applicant with approval of 90 per cent voting share of CoC. Similarly, sub-clause (7) of Regulation 36B inserted with effect from 4-7-2018, dealing with request for resolution plans unambiguously postulates that Resolution Professional may, with approval of Committee, reissue request for resolution plans, if resolution plans received in response to earlier request are not satisfactory, subject to condition that request is made to all prospective resolution applicants in final list.

• In instant case, finally only two bidders had participated and submitted their resolution plan which was placed before CoC and stated to have been rejected. However, applying principle underlying Regulation 36B(7), it is deemed appropriate to permit IRP to reissue request for resolution plans to aforesaid two bidders and/or to call upon them to submit revised resolution plan(s), which can be then placed before CoC for its due consideration.

• In this backdrop, it would be in the interest of all concerned to accept a viable plan reflecting recent legislative changes.

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