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Can't let IBC fail, avoid delay in resolution processes, SC tells tribunals
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SME Times News Bureau | 13 Sep, 2021
Raising concern over delays in corporate insolvency resolution processes
(CIRP), the Supreme Court on Monday asked the National Company Law
Tribunal and the National Company Law Appellate Tribunal to strictly
adhere to the mandated 330-day timeline.
Observing that judicial
delay was one of the major reasons for the failure of the insolvency
regime that was in effect prior to the Insolvency and Bankruptcy Code
(IBC), the court said: "We cannot let the present insolvency regime
meet the same fate."
The bench, headed by Justice D.Y.
Chandrachud, said that the NCLT and the NCLAT should endeavour, on a
best effort basis, to strictly adhere to the timelines stipulated under
the IBC and clear pending resolution plans forthwith.
As per the
Insolvency and Bankruptcy Code, 2016, the CIRP should be completed
within 180 days or within the extended period of 90 days and mandatorily
be completed within 330 days, including any extension and the time
taken in legal processes.
The top court, in its judgement, noted
that the delays were attributable to the NCLT taking considerable time
in admitting CIRPs and late and unsolicited bids by Resolution
Applicants after the original bidder becomes public upon passage of the
deadline for submission of the plan.
Multiplicity of litigation and the appellate process to the NCLAT and the Supreme Court also contribute, it added.
"Such
inordinate delays cause commercial uncertainty, degradation in the
value of the corporate debtor, and makes the insolvency process
inefficient and expensive," it said.
The bench was hearing the case of Ebix Singapore PTE against the Committee of Creditors of Educomp Solutions.
The
NCLAT, in July 2020, set aside an order passed by the NCLT's Delhi
bench which had allowed Ebix Singapore to withdraw its resolution plan
for Educomp Solutions after being selected by 75 per cent members of the
CoC. This was challenged by Ebix Singapore PTE in the Supreme Court.
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