The Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC) has to be completed within the 330-day deadline prescribed under the law, the Supreme Court ruled on Monday, reports legal portal Bar & Bench.
The court held that since the 330-days outer limit can be extended only in exceptional circumstances, "this open-ended process for further negotiations or a withdrawal, would have a deleterious impact on the Corporate Debtor, its creditors, and the economy at large as the liquidation value depletes with the passage of time."
The National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) should, therefore, while deciding IBC matters, respect the deadline prescribed by the legislature, a Bench headed by Justice D Y Chanddrachud has held.
The Supreme Court noted that if Parliament intended to permit such withdrawals/modifications sought by successful Resolution Applicants as being beneficial to the economic policy, "which it has sought to pursue while enacting the IBC, it would have prescribed timelines for setting the clock-back or directing immediate liquidation if the withdrawals occur after a certain period.’’
"We hold that the existing insolvency framework in India provides no scope for effecting further modifications or withdrawals of CoC-approved Resolution Plans, at the behest of the successful Resolution Applicant, once the plan has been submitted to the Adjudicating Authority. A Resolution Applicant, after obtaining the financial information of the Corporate Debtor through the informational utilities and perusing the IM, is assumed to have analysed the risks in the business of the Corporate Debtor and submitted a considered proposal. A submitted Resolution Plan is binding and irrevocable as between the CoC and the successful Resolution Applicant in terms of the provisions of the IBC and the CIRP Regulations," reads the judgment.
source https://www.freepressjournal.in/india/fpj-legal-sc-asks-nclt-nclat-to-strictly-adhere-to-ibc-timelines
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